Renewables are an expensive substitute for Indonesia's coal dependence
Various important themes and topics were discussed at this year’s COP26 and Indonesia was one of the countries that faced growing pressure at the summit.
Important changes to the Fair Trading Act 1987 (NSW) (Act) came into effect from July 1, 2020 with a six month grace period – which is about to end shortly.
The Act requires businesses selling to customers in New South Wales (NSW) (whether in person or online) to alert their customers to substantially prejudicial terms and conditions before supplying goods and services to the customer. It also requires that intermediary businesses (such as agents and brokers) disclose the existence of referral and commission arrangements they have in place with suppliers.
The intent of these changes to the Act is to ensure that consumers are able to easily understand the contracts they sign up to and to help them to make informed purchasing decisions. The explanatory materials indicate that it is no longer good enough that prejudicial terms are hidden in long contracts or that they are so complex that the ordinary person would not understand the terms. Contracts must be clear, up front and explicit about the terms and conditions that will apply when a consumer purchases the trader’s goods and services, particularly when a clause may substantially prejudice the interests of the consumer.
The new section 47A of the Act requires that suppliers must, before supplying to a consumer, take reasonable steps to ensure the consumer is aware of the substance and effect of any term relating to the supply of goods or services that may substantially prejudice the interests of the consumer.
In the context of these new legislative provisions, “substantially prejudice” includes:
This list is not exhaustive. Businesses will need to carefully scrutinise their trading terms and conditions to consider other terms that should also be disclosed if they may substantially prejudice the consumer. Other terms that may be caught by this section include automatic rollover clauses, minimum notice provisions for termination, or in certain circumstances those prescribing a jurisdiction outside of NSW. As is often prudent when dealing with mandatory disclosure obligations, businesses should consider erring on the side of over-disclosing rather than potentially falling short of the obligation.
Disclosure must be provided upfront, before the goods or services are supplied to a customer of the business or the transaction is finalised.
A new section 47B has also been introduced, which impacts intermediaries that receive a financial incentive (e.g. a commission, referral fee, rebate or other incentive) in connection with the provision or referral of goods or services.
Section 47B is intended to capture those businesses that act as a referrer between customers and suppliers of goods or services. However, only those intermediary businesses that have an arrangement with a supplier (or suppliers) which includes a financial incentive will be caught by the Act and be required to comply with the disclosure requirements.
Intermediaries who are caught must take reasonable steps to ensure that the consumer acquiring the goods or services is aware of the existence of the financial relationship between the intermediary referrer and the supplier of goods or services. Intermediaries will not be required to specify the nature or particulars of that financial relationship, but will need to disclose the existence of the financial incentive to the consumer.
The NSW Fair Trading Regulations may be revised to provide guidance as to what constitutes ‘reasonable steps’.
However, at this stage, there is little guidance as to what needs to be done by businesses to satisfy this test. NSW Fair Trading has provided some guidance that indicates that reasonable steps means steps that are appropriate in the circumstances and are sufficient to make customers aware of any terms and conditions or commission or referral arrangements. This can be achieved by being clear, upfront and making it a standard feature of every transaction. Two examples given by NSW Fair Trading are:
NSW Fair Trading also outlines some more general examples of what may amount to “reasonable steps”. This includes:
The guidance indicates that the best way to confirm that your business has taken reasonable steps to alert the customer to a substantially prejudicial term is by checking with the customer directly. This could be achieved by verbal confirmation, initialling a contract, or checking a box on a web-form.
For commission or referral arrangements, some of the steps a business could take to alert the consumer to the financial incentive may include:
NSW Fair Trading has been taking an “educational approach to compliance” for the six month period from July- December 2020. However, it has indicated that businesses who are made aware of the new law need to start making any necessary changes to their operations to accommodate the new requirements.
Significantly, there are not expected to be any further exemptions after January 1, 2021, at which time all businesses selling goods and services to customers in NSW must ensure that they comply with the new requirements.
Compliance with the new requirements should be taken seriously given the range of potential consequences and penalties. This includes:
Businesses should take action now given that the six month grace period will soon end.
Please get in contact to discuss compliance with the new requirements before the deadline of January 1, 2021.
Thank you to Jonathan Muncey for his assistance in preparing this legal update.
© Norton Rose Fulbright LLP 2021