New disclosure obligations for NSW businesses and intermediaries

New disclosure obligations are now in place which will change the way NSW businesses (including intermediaries such as agents and brokers) communicate to their customers before completing a sale. The obligations aim to improve transparency for consumers without overly burdening businesses.

The new obligations that came into effect 1 July 2020 require businesses to disclose:

• terms or conditions of contracts that substantially prejudice the customer.
• if they have commission or referral arrangements with another supplier.

What changes do I need to be aware of?

Businesses

Before supplying goods or services, a business must take reasonable steps to make customers aware of terms and conditions that may impact consumers. This includes at least the following:

• limit the liability of the supplier
• provide that the customer is liable for damage to delivered goods
• permit the supplier to provide data about the customer, or data provided by the customer, to a third party in a form that may enable the consumer to be identifiable by the third party
• require the consumer to pay an exit fee, a balloon payment, or other similar payment.

Intermediaries (i.e. agents, wholesalers, distributors and retailers) 

Intermediaries must also take reasonable steps to make customers aware of any commission or referral arrangements where the business receives a financial incentive from another supplier.

Meaning, customers will need to be informed that an arrangement exists, however intermediaries do not need to disclose the nature or value of the financial incentive.

Consumers

Consumers should be aware that these changes are now law, although an educational rather than enforcement approach will be adopted for the first six months (1 July 2020 to 1 January 2020).

What businesses will be most impacted?

The obligations aim to improve transparency for consumers without overly burdening businesses.

Examples of businesses that will be affected by these new obligations will include banks and lenders, real estate agents, telecommunication companies, etc.

Real estate agents in particular may need to consider whether they are required disclose any arrangements relating to commission or referral arrangements.

How do I action these changes?

Businesses and Intermediaries are expected to take reasonable action to inform consumers of these terms and conditions. The best way to do this is to be clear, upfront and automatic by drawing consumer’s attention to the terms and conditions and providing an explanation.

Examples of how a business or intermediary might disclose this information include:

• provide a summary on the first page of a contract
• when online, information can appear on the screen in a clear format
• to disclose referral commissions, include this information on quotes
• put an automatic disclaimer on emails

For more information and FAQs go to the NSW Government Fair Trading website.

At Donovan Oates Hannaford, business Law is our passion. We are business owners and as a firm we have worked with business people in our local community for over 70 years; providing them with advice to protect their commercial investments. Contact us today if you require legal business support.

(Source: NSW Government Fair Trading)