scales of justice

Submission: Trade Practices – Unconscionable Conduct

Consumer Action welcomes the opportunity to provide this submission to the Senate Economics Committee’s Inquiry into the need to develop a clear statutory definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (TPA) and the scope and content of such a definition.

In summary, our key points are:

  1. Statutory unconscionable conduct under sections 51AB and 51AC of the TPA is intended to apply more broadly than the general law or section 51AA concept. However, it appears that courts still view as a determinative factor, whether the “victim” was under a ‘special disadvantage’ of which the other party took advantage. The TPA should be amended to make clear that ‘special disadvantage’ is not an essential element for making out a breach of sections 51AB or 51AC.
  2. The statutory unconscionable conduct provisions are not effective in remedying more general or systemic unfair trading practices that harm consumers, due to their limited focus on remedying individual cases of unfair conduct.
  3. The better approach to addressing problems with unfair practices against consumers, both in terms of unfair contractual substance and unfair trading conduct, is to introduce new provisions. In the case of unfair contractual substance the implementation of national unfair contract terms laws has now been agreed by the Council of Australian Governments. In the case of unfair trading conduct, a national general prohibition on unfair trading or commercial practices similar to the European Unfair Commercial Practices Directive is needed.
  4. The operation of the statutory unconscionable conduct provisions should be reviewed at the same time as the new unfair contract terms provisions are first reviewed within five years of their introduction. Given the interaction of the two sets of provisions, this might provide a better opportunity to examine whether changes should be made to Part IVA of the TPA.
  5. Any amendments made to the statutory definition of unconscionable conduct in the TPA would also need to be made to the mirror unconscionable conduct provisions in the Australian Securities and Investments Commission Act 2001.

To read our submission, click here: Trade Practices – Unconscionable Conduct.

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