Question 11–1 Should provisions similar to the responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) apply to other consumer contracts? That is, should businesses have obligations to ensure that a consumer contract is suitable for the consumer, including making all reasonable inquiries and ensuring that the consumer fully understands the contract terms?
11.11 There are a range of consumer protection laws that allow contracts to be challenged, including under the ACL and the National Consumer Credit Protection Act 2009 (Cth).
11.12 The ACL contains provisions under which contracts or contractual terms may be avoided. These include provisions in relation to misleading or deceptive conduct, unconscionable conduct, unfair contract terms and unsolicited consumer agreements.
11.13 Legal Aid Queensland submitted that the existing consumer law framework ‘effectively encourages people with a disability to participate in society to the fullest extent possible without being denied goods or services because it might be more difficult to ensure they are aware of their legal obligations’ and reflects the CRPD approach to capacity. That is, applying this to consumer law specifically, ‘a person may have the ability and understanding to engage with simple consumer products or transactions but may not have the capacity to understand or engage with more complex consumer products’.
11.14 The National Consumer Credit Protection Act 2009 (Cth) contains provisions on responsible lending conduct. These essentially require credit providers to assess the capability of all consumers—not only consumers with disabilities—and assist them to understand consumer credit and financial products being offered.
11.15 Legal Aid Queensland submitted that the consumer credit provisions offer ‘adequate protections for people with disabilities without the need to adopt an overarching definition of capacity or disability in the legislation’—an approach, it said, that may serve as a useful model for other legislation in the Commonwealth jurisdiction.
11.16 For example, the National Association of Community Legal Centres submitted that, to improve protection for people with disability entering into contracts, companies and retailers should be subject to regulations requiring them to ‘ensure that consumers have the capacity to understand and fulfil the terms of contracts’—for example, through asking a ‘mandatory list of questions to ensure that a consumer has understood the contract’.
11.17 Similarly, the Public Interest Advocacy Centre suggested that there is a need for ‘greater protection of people with disabilities in signing up for consumer contracts, particularly when this is done over the phone and through door-to-door sales’.
11.18 On the other hand, reforms that place undue focus on assessment of a person’s abilities, including by imposing positive obligations to make inquiries about the understanding consumers have of particular transactions, may end up disadvantaging some people because goods and services may not be made available to them.
11.19 However, the ALRC is interested in further comment on possible reform. For example, should provisions similar to those requiring responsible lending conduct apply to other consumer contracts, such as telephone or door-to-door sales? That is, should businesses have obligations to ensure that a consumer contract is suitable for the consumer, including making all reasonable inquiries and ensuring that the consumer fully understands the contract terms?
See, eg, Competition and Consumer Act 2010 (Cth) sch 2, ss 18, 20, 22–24; pt 3–2, div 2.
Legal Aid Qld, Submission 64.
National Consumer Credit Protection Act 2009 (Cth) ch 3.
Legal Aid Qld, Submission 64.
National Association of Community Legal Centres and Others, Submission 78.
Public Interest Advocacy Centre, Submission 41.