On 27 November 2009 the Federal Government published an Issues Paper entitled: ‘The nature and application of unconscionable conduct regulation. Can statutory unconscionable conduct be further clarified in practice?’1

The government’s proposals in relation to unconscionable conduct are part of a package of reforms to create a new ‘Australian Consumer Law’. Another aspect of these reforms is the introduction of a new regime to regulate ‘unfair’ terms in contracts with consumers. For more information on this topic please see our previous article entitled ‘Unfair contract terms: Update on the Trade Practices Amendment (Australian Consumer Law) Bill 2009’2

In this latest Issues Paper on unconscionable conduct, the Federal Government has called for submissions on the possible options for clarifying the meaning and scope of unconscionable conduct under Part IVA of the Trade Practices Act 1974 (Cth) (TPA) (and, by extension, to the corresponding provisions in the ASIC Act for financial services). The intention is that, if a statutory formulation is adopted, that formulation would be included in the TPA (and the ASIC Act) as part of the new ‘Australian Consumer Law’ (in amendments to be introduced into Parliament in early 2010).

Freehills has made a submission to the Federal Government in response to the above Issues Paper. For the reasons explained in the submission, it is submitted that:

  • it is premature for the Federal Government to be considering the introduction of a statutory formulation of unconscionable conduct without taking into account, and determining the operation in practice, of the proposed ‘unfair contract terms’ initiative which forms part of the Trade Practices Amendment (Australian Consumer Law) Bill 2009, and
  • it would be inappropriate to identify abstract examples of unconscionable conduct to create presumptions in favour of the consumer.