20 January 2021
Last year, NSW introduced changes to the Fair Trading Act 1987 (NSW) (Act) which were aimed at improving transparency for consumers. The changes require NSW suppliers to communicate and disclose certain information to consumer customers before providing goods or services to them, including any “prejudicial” contract terms or referral arrangements. These changes took effect on 1 July 2020, and as of 1 January 2021, are now being actively enforced.
What are the changes?
There are two key changes:
These obligations apply in respect of any supply to consumers, being a person who purchases goods or services which are valued below $40,000, or are valued over $40,000 but are of a type ordinarily acquired for personal, domestic or household use. These values will increase to $100,000 as of 1 July 2021.
Who do the changes apply to?
The changes will apply to conduct in or outside NSW, that is in connection with goods or services supplied in NSW, affects a person in NSW or results in loss or damage in NSW. Practically speaking:
Do these changes sound familiar?
Some of these changes are similar to existing disclosure obligations which may already apply to and be complied with by your business (e.g. Australian Consumer Law, the Privacy Act or laws applying to agents and secret commissions). However, these new reforms will apply in addition to any existing disclosure obligations.
What do businesses need to do?
For most businesses supplying goods or services in or to NSW, compliance will mean a review of standard contract terms to check:
If these apply, you’ll need to update your processes to draw these terms to the attention of customers before you supply them with any goods or services. While what constitutes “reasonable steps” will vary depending on the circumstances, NSW Fair Trading encourages “clear, upfront and automatic disclosure”. Common strategies will involve:
Strategic alliances, referral agreements or other handshake arrangements that could constitute an intermediary arrangement should also be reviewed.
When do the changes start?
To give businesses time to adapt to the changes, enforcement of the reforms was deferred for six months after their introduction in July 2020, in favour of an educational approach to awareness and compliance. However, as of 1 January 2021, the changes are now being enforced.
What are the penalties?
Non-compliance may incur fines of $22,000 (individuals) or $110,000 (corporations). NSW Fair Trading can also issue penalty notices of $550 (individuals) or $1,100 (corporations).
If you think these changes might apply to you and would like advice on what changes you need to make, please contact us.
Author: Georgia Milne
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.