The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Chris Bowen

Chris Bowen

Minister for Financial Services, Superannuation and Corporate Law

9 June 2009 - 14 September 2010

Media Release of 17/03/2010

NO.027

Release of Options Paper on Unfair Terms
in Insurance Contracts

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today released an options paper seeking comments on options to address unfair terms included in insurance contracts.

The options paper released today sets out a number of possible options to deal with the potential for unfair terms in insurance contracts, including extending the generic provisions, and making other reforms to the Insurance Contracts Act 1984.

"This paper will examine the current carve-out under section 15 of the Insurance Contracts Act for insurance contracts from the operation of the unfair contracts terms provisions of the ASIC Act," Mr Bowen said.

"The Government is aware of a range of views on the preferred course of action on this question so that it is why is necessary to provide an opportunity for all key stakeholders to comment on proposed options in this discussion paper."

Minister Bowen also welcomed the passage of new legislation through the Senate that will give new remedies to individual consumers affected by unfair terms in contracts related to the acquisition of goods or services (including financial services) for personal, domestic or household use. However, the Insurance Contracts Act limits the availability of remedies in other legislation when dealing with insurance contracts.

"The passage of the Australian Consumer Law and the related amendments to the ASIC Act through the Senate is an important step in providing the credit regulator, ASIC, with the ability to be able to bring actions on behalf of consumers against unfair terms in credit contracts, including mortgages and transaction accounts," Mr Bowen said.

The Government has also introduced a package of reforms to the Insurance Contracts Act into the House of Representatives today.

The issue of unfair contract terms will be dealt with pending the outcome of public consultation on the options paper.

Copies of the options paper can be obtained from the Treasury website: www.treasury.gov.au.

The closing date for submissions is 30 April 2010.

17 March 2010