[co-author: Elouise Casey]
All lenders need to review their loan agreements following the release of ASIC’s Report 565 into ‘Unfair Contract Terms and Small Business Loans’.
Unfair contract term protections for consumers were extended to cover standard form small business contracts entered into, or renewed, on or after 12 November 2016.
REP 565 sets out the changes made by the big four banks to remove unfair terms from their small business loan contracts of up to $1 million – see the table below.
ASIC intends to examine other lenders' loan contracts to ensure that their contracts do not contain terms that raise concerns under the unfair contract terms law. Although these initiatives relate to small business contracts, it is likely that courts, EDRs and ASIC will have similar expectations in relation to consumer loans, and so it is timely for lenders’ to also consider reviewing those contracts.