Shonks to face $1 million fines under new consumer protection law

Ever heard of a “trailing commission?”

That’s a nasty little device, sometimes hidden in  contracts, which allows the advisor, who sells you a financial product, a small commission for the life of the contract.

These items are often hidden in the fine print of contracts, that can run to a hundred pages or more.

You might never know about them until you start asking why you receive less than you expected, when that product matures, perhaps 20 years after you bought it.

Take heart.  Consumer protection, against hidden nasties like these, are about to be strengthened.

And the shonks, who write such deals, will find themselves facing fines of up to $1.1 million, for their unconscionable conduct.

That’s because  the Senate has just passed tough new consumer protection laws.

The Federal government says they represent the biggest reform of consumer protection in Australia since the Whitlam Government introduced the Trade Practices Act back in 1974.

The Consumer Affairs Minister, Craig Emerson said the new law would  ban unfair contracts between businesses and consumers.

He said this would put a stop to the  small print “nasties” which can trap unwary consumers.

“This new law, combined with a second bill I introduced into parliament this morning, provides a new deal for consumers,” Dr Emerson said.

“It offers protections for consumers never before available to all Australians.

“This means businesses will no longer be able to get away with unfair terms and conditions and will have to be upfront with their customers,” Dr Emerson said.

Businesses found guilty of unconscionable conduct – that is, behaviour so odious that any reasonable person would find it deplorable – would face massive fines.

“And businesses that dupe customers with false or misleading information about their product or service can be named and shamed by the Australian Competition and Consumer Commission,”  he warned.

The Australian Consumer Law is a single law which replaces 17 Commonwealth, State and Territory acts in one go, Dr Emerson said.

The Productivity Commission had  estimated that this streamlining would save up to $4.5 billion a year.

It would also take Australia towards a seamless national economy.

There will be a new national curfew on door- to-door sales, when the new law comes into effect before the end of this year.

This would ban such sales on Sundays and public holidays.

Consumers rights to refunds or repairs under warranties  would also be clarified.

“Importantly, for the first time, there will also be a national system of product safety, ensuring the same level of protection across the nation,”  Dr Emerson said.

“At the moment, the protections against dangerous or suspect products are fragmented.

“This brings it all together so the same rules apply regardless of where you live,” he said.

“Dodgy operators and shonks who flout the law will face the same tough sanctions wherever they go in Australia,” Dr Emerson said.

“These powers strengthen our hand in tackling bad business practices and problem businesses.”

The States and Territories will each adopt the ACL as their own law.