Property Funds need to review their contracts as new Unfair Contract Terms regime commences 9 November 2023
New legislation regarding Unfair Contract Terms for financial products comes into effect on 9 November 2023. The new legislation will affect more unlisted property funds than the current UCT regime because it applies to contracts with a broader range of customers.
The new UCT regime will apply to financial products that are standard-form small business contracts where the upfront price does not exceed $5 million and where at least one party has:
- fewer than 100 employees (currently fewer than 20 employees); or
- less than $10 million in annual turnover during the previous financial year.
Property funds should review their standard form contracts, to ensure they comply with the new laws.
A prime example of a standard form contract is the contract under an application form and its terms and conditions.
Significant penalties to be introduced
Property funds have an extra incentive to ensure they are compliant with the new UCT regime because of the penalties which are being introduced.
The new penalties are significant.
The maximum penalty for corporations is the greatest of: 50,000 penalty units (currently $15.65 million); the amount of the benefit derived or detriment avoided multiplied by three; or 10% of annual turnover subject to a cap of 2.5 million penalty units (currently $782.5 million).
If you have any questions for the PFA Issues and Regulatory Committee, please contact PFA at pfa@propertyfunds.org.au