It's right up the top of the list of Australian values – it's even embedded in our national anthem.
You'd therefore expect it to be embedded in our justice system. But when it comes to the Australian Consumer Law, that's not the case.
While the law protects us from unfair contract terms, it's a very narrow protection. It only deals with individual terms of contracts, rather than the
contract as a whole. The problem with this is that many common contracts are unintelligible – contracts for basic services like mobile phone plans can
stretch to hundreds of pages. We say that if a contract is so long or complex that no ordinary person could reasonably be expected to understand it, the
law should say it's unfair and unenforceable.
Another problem is that the insurance industry is exempt from the law on unfair contract terms. To put it another way, the law says it's okay for insurance
companies to sell policies that contain unfair terms.
CHOICE's work on mental health and insurance illustrates why insurers don't deserve this special treatment. Many life and travel insurance policies deny
cover to people who have ever sought help for any type of mental health condition, regardless of the circumstances. We think that many of these blanket
exclusions would be unenforceable if consumers were protected from unfair terms in insurance policies.
Even more importantly, we think it's time for a ban on business practices that are fundamentally unfair. Some businesses only succeed through exploitative
practices that target vulnerable people, selling them goods and services that can only make their circumstances worse.
Funeral insurance is a great example. Funeral insurance companies often target young people, who have to maintain payments right up to their death in order
for their family to receive a payout – a recent ASIC study found that 50% of Indigenous consumers with funeral insurance were under the age of 20. Insurers
then ratchet up the premiums as consumers get older, making them ever harder to afford. As a result, many people end up cancelling a policy, having paid
thousands of dollars with nothing in return.
The business model of the funeral insurance industry is based on ripping off consumers, yet there is nothing in the current law that says this isn't OK.
The European Union and United States ban unfair business practices. It's time to ban them in Australia as well.
These are just a few of the changes we are pushing for as part of the review of the Australian Consumer Law that is currently underway. People expect the
law to protect them from being ripped off. The law needs to deliver on that expectation.