Consumers are set to be better protected than ever this year with a series of new laws and regulations.
It's never entirely possible to close every loophole or control all rogues with legislation. The Government has to play a balancing act when setting rules to protect consumers on one hand, but also ensure important sectors such as banking, insurance and financial services can still do business. Nonetheless, changes are afoot in a variety of areas that affect our finances.
More secure tenancies:
Changes to the Residential Tenancies Act coming in on February 11 are being celebrated by tenants but have left many landlords worried. The list of changes is long. Security of tenure is the main one, with landlords required to meet new termination grounds to evict tenants. The changes will ban rental bidding, allow easier assignment of tenancies, and strengthen enforcement measures.
When financial advice goes wrong, individuals can lose their entire life savings. The Financial Services Legislation Amendment Act comes into effect on March 15 and requires all financial advisers to meet the same standards, that all advisers providing advice to retail clients must either hold, or operate under, a financial advice provider licence, stronger requirements in relation to education, and also a code of conduct. The code will require advisers to treat clients fairly, act with integrity, give financial advice that is suitable, and ensure that the client understands the advice. Advisers will also be required to have competence, knowledge and skill and keep that up-to-date.
A series of changes to the Credit Contracts and Consumer Finance Act will continue to come online this year. The changes crack down on the seedier elements of the lending business such as loan sharks and mobile traders. New advertising standings from April 1 require lenders to reveal more of the fine print in adverts including payment details, interest rates, credit fees and charges. Mobile traders are brought under the act and will be required to be "fit and proper persons".
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You'd hope that banks, insurers and other deposit takers treat consumers fairly. That's not always the case as Australia's Royal Commission into misconduct in the financial sector found. Our Government introduced the Financial Markets (Conduct of Institutions) Amendment Bill to ensure that financial institutions and those who sell on their behalf treat consumers fairly. At present it looks like the bill will prohibit incentives from companies to salespeople based on the volume of sales, which can encourage mis-selling. It will also require companies to become licensed, comply with their fair conduct programmes, and be monitored by the Financial Markets Authority. The law is still going through Parliament.
Fair trading reforms:
The Fair Trading Amendment Bill is at select committee level in Parliament. It's designed to protect consumers against aggressive sales tactics such as the mobile trader who entered a mental health unit and signed up patients for unreasonable phone and PlayStation console contracts. The new law will prohibit unconscionable conduct in trade, cover unfair contracts in a business-to-business context and strengthen the ability of consumers to stop salespeople entering their properties. A welcome change for sole traders and small businesses will be the extension of the law to protect them from other businesses failing to comply with terms of existing contracts, making excessive demands, or blacklisting and/or bullying them.
The Government is currently working on insurance contract law reforms. As the proposals stand currently, insurance companies would be required to ask you the right questions instead of leaving it up to you to second guess what to tell them. The latter results sometimes in claims being declined for innocent non-disclosure. The law reform should result in policies to be written in plainer English, and insurers being required to respond proportionately in the case of non-disclosure.
Hopefully with all these changes we'll see fewer victims of unacceptable practices hitting the headlines this year.