The Commerce Commission has released a report which details the findings of its first industry review of “unfair contract terms” in the telecommunications sector.
The report also highlights the industries that the Commerce Commission will prioritise for its next reviews, including the “credit sector”.
The report is summarised below and a copy is available here.
In March 2015, the Fair Trading Act 1986 was amended to include new provisions that prohibit unfair contract terms (the UCT provisions).
The UCT provisions apply to all “standard form consumer contracts”, including standard form credit contracts.
A breach of the UCT provisions is also a breach of the Responsible Lending Code.
Examples of terms the Commission found to be “unfair”
The report covered a review of specific standard form consumer contracts across the New Zealand telecommunications sector. It identifies a range of terms that the Commission considered to be potentially unfair. It focuses in particular on terms that:
- limit or exclude the liability of the company,
- allow the company to unilaterally vary the contract,
- make the customer responsible for unauthorised charges, and
- allow the company to avoid liability for consequential loss.
It is not uncommon for credit contracts to contain these types of provisions.
Which industry will the Commerce Commission review next?
The Commerce Commission has indicated that it will continue to undertake industry reviews with a particular focus placed on industries that have proven problematic overseas, or industries in respect of which complaints have been received in the past.
The Commerce Commission states in this report that it has now prioritised a review of standard form consumer contracts in the following sectors:
- electricity retail, or
What you should do?
If you provide credit on standard form contracts, you should review your terms and consider whether, in light of the teleco sector review, any changes to your terms are required.
If you need any further information on the matters covered in this update, please contact any of us or your usual Bell Gully adviser.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.