Senate committee recommends strengthening unconscionable conduct regime

A Senate committee examining the operation of unconscionable conduct laws has recommended the ACCC find ways to improve the operation of Australia’s unconscionable conduct framework,

A Senate committee examining the operation of unconscionable conduct laws has recommended the ACCC find ways to improve the operation of Australia’s unconscionable conduct framework, but has stopped short of recommending that a definition of descriptions of unconscionable conduct be added to the Trade Practices Act.

The committee’s report, handed down this morning, acknowledges that there have been only two successful prosecutions for unconscionable conduct in the past decade and argues the laws favour big business.

“It is the committee’s view that the present legal position is skewed to favour big business interests, sometimes at the direct expense of smaller businesses and consumers. As a matter of good public policy, legislative redress is needed.”

But the committee has expressed reservations with calls to insert a definition of unconscionable conduct into the TPA, noting risks including the possibility a definition could be used to catch small business operators and the possibility that courts could become stuck on a prescriptive definition.

Instead, the committee has recommended that the ACCC work with stakeholders from the franchise and retail tenancy areas to consider the option of creating a list of examples of unconscionable conduct that could be inserted into the TPA.

It has also recommended that the ACCC “pursue targeted investigation and funding of test cases” to help speed up the evolution of unconscionable conduct legislation.

“The regulator and the courts have not pursued the crucial test cases which would extend the judicial interpretation of [unconscionable conduct].”

Executive director of the Franchise Council of Australia, Steve Wright, is pleased with the outcome. The FCA has argued against the insertion of a definition or examples of unconscionable conduct in the TPA, but Wright says the organisation would welcome the opportunity to continue discussions with the ACCC.

“We would go into that discussion with a position that a list of examples is very risky, but we will have an open mind. We’re not against the concepts. I don’t think anybody is.”

Related stories:

• Franchisors under fire from Federal Parliamentary inquiry
• ACCC launches unconscionable conduct action against franchisor