ASIC and ASBFEO recently met with the big four banks which resulted in them committing to a series of comprehensive changes to ensure all small business loans entered into or renewed from 12 November 2016 will be protected from unfair contract terms.
The Institute of Public Accountants (IPA) has voiced its support for the ASBFEO’s intervention with the big four banks, and is calling on accountants to hold them responsible to their requirements by meeting with their clients to review their contracts.
“While the IPA was pleased with the passing of unfair contract legislation which has been in place since November last year, much work is required to enforce current practices which still see unfair clauses in contracts with small business,” said Andrew Conway, CEO of the IPA.
“Our advice to any small business, that is uncertain or feels that a contract that they are entering contains unfair terms, is see your accountant. Similarly, we are urging our members to speak to their small business clients and businesses to review all contracts, including those with banks and other lending institutions.”
Common unfair contract terms include terms that allow one party at their discretion to change the fees being paid or to change terms and conditions without telling the other party, terms that allow one party to terminate the contract but not the other party, or terms that penalise one party for breaching or terminating the agreement but not the other party.
“Quite often in these scenarios, one party has greater bargaining power than the other, and it is a case of ‘take it or leave it’, whether you are dealing with a bank or your local gym,” Mr Conway said.