The head of an industry body is urging business owners to continue checking contract terms when dealing with banks, noting that the introduction of unfair contract legislation last year is not the same as enforcement.
The Institute of Public Accountants (IPA) has voiced its support for the small business ombudsman’s warning to the big four banks in relation to their responsibilities under unfair contracts legislation.
“While the IPA was pleased with the passing of unfair contract legislation, which has been in place since November last year, much work is required to enforce current practices which still see unfair clauses in contracts with small business,” said IPA chief executive officer Andrew Conway.
“Our advice to any small business, that is uncertain or feels that a contract that they are entering contains unfair terms, is see your public accountant.
“Similarly, we are urging our members to speak to their small business clients and businesses to review all contracts, including those with banks and other lending institutions,” said Mr Conway.
Contracts can relate to the supply or hire of goods, services or financial products.
Examples of contract terms that may be found to be unfair include terms that allow one party at their discretion to change the fees being paid or to change terms and conditions without telling the other party; terms that allow one party to terminate the contract but not the other party; or terms that penalise one party for breaching or terminating the agreement but not the other party.
“Quite often in these scenarios, one party has greater bargaining power than the other, and it is a case of ‘take it or leave it’, whether you are dealing with a bank or your local gym,” said Mr Conway.