Sydney, Sept 11: The Australian legal landscape is undergoing significant changes, impacting both businesses and individuals.
These developments span contract laws and the realm of income protection insurance, and they call for careful consideration by all stakeholders.
The Australian Competition and Consumer Commission (ACCC) is proactively encouraging businesses to review and adapt their standard form contracts.
These revisions are essential before new penalties, set to come into effect on Nov 9, make it illegal for businesses to propose, employ, or rely on unfair contract terms in agreements with consumers and small businesses.
These forthcoming changes grant courts the authority to impose substantial penalties on both individuals and businesses found incorporating unjust terms into standard form contracts.
This marks a considerable departure from prior practices, where courts could only declare specific contract terms as unfair, rendering them void.
Mick Keogh, Deputy Chair of the ACCC, underscores the importance for businesses to ensure their standard form contracts are equitable.
He emphasizes that these changes should motivate businesses to comply with the law, as previous compliance and enforcement actions have had limited impact.
Standard form contracts serve as a cost-effective means for businesses to engage with a broad consumer or small business clientele.
However, these contracts are often non-negotiable, creating an inherent power imbalance in favor of the drafting party.
These new regulations uphold the established criteria for identifying unfair contract terms.
Yet, they introduce the potential for substantial penalties, aiming to protect consumers and small businesses who may lack the bargaining power and expertise to challenge these contracts effectively.
Simultaneously, the landscape of income protection insurance in Australia presents its own set of challenges.
Small business owners, sole traders, and professionals with income protection policies are grappling with soaring premiums that could price them out of coverage.
Insurers are increasingly seeking to shed “unprofitable” customers from their portfolios, resulting in significant premium hikes.
Some individuals have seen their premiums surge by up to 330 per cent in just one year, while others have received quotes exceeding $1,100 more per month for their coverage.
Income Protection insurance is critical for safeguarding individuals’ income in case of illness or injury, such as back injuries, broken bones, or mental health issues that can lead to prolonged periods off work.
In response to concerns about the long-term sustainability of Income Protection policies, the Australian Prudential Regulation Authority (APRA) requested changes in October 2021. These changes include capping ongoing payouts at 70 per cent of an individual’s income, modifying benefit periods, and banning extra benefits.
While many individuals with older Income Protection policies enjoy better value for money, these policies are no longer available.
Consequently, insurers are significantly raising premiums, disproportionately affecting self-employed and blue-collar workers who traditionally rely on this coverage.
Lisa Varker, a Life Insurance Advisor at Compare Club, expressed concern about the premium increases and the potential exclusion of those who need the policies most.
She urged individuals with Income Protection policies to consult with financial professionals or brokers to explore better alternatives.
To find value-for-money Income Protection policies, individuals should consider factors like waiting periods, benefits adjustments, payout levels, and the sum insured.
Consulting with financial professionals can help them make informed decisions in navigating these challenges.
In this evolving legal landscape, both businesses and individuals must stay informed and take proactive measures to ensure they remain protected and compliant with the law.
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