Significant new disclosure requirements commence for NSW businesses and intermediaries

Businesses operating in New South Wales are now subject to new obligations to make consumers aware of certain terms which may be substantially prejudicial to them, while those that meet the definition of "intermediaries" are also obliged to disclose commissions and referral fees.


On 1 July 2020, reforms to the Fair Trading Act 1987 (NSW) (FTA) commenced, imposing new disclosure obligations on businesses relating to terms or conditions that are substantially prejudicial to Consumers and imposing disclosure obligations on intermediaries if they receive a commission or referral fees upon the completion of a sale.

What has changed?

Under section 47A of the FTA, businesses are now required to ensure that, prior to the supply of goods or services to Consumers, reasonable steps have been taken to ensure that their customers have been made aware of the substance and effect of any terms or conditions that have the capacity to substantially prejudice their interests. The NSW Department of Fair Trading (Fair Trading) has provided the following list of terms which might meet this standard:

  • terms which limit the liability of the supplier;
  • terms which provide that the Consumer is liable for damage to delivered goods;
  • terms which allow the supplier to provide data about the Consumer to a third party and in a form that enables the Consumer to be identified; and
  • terms which require the Consumer to pay an exit fee, balloon payment or any other similar payment.
It is important to note that this list is not exhaustive. Businesses will therefore need to ensure that they are aware of all terms or conditions in their consumer contracts which may substantially prejudice the interests of Consumers.

Pursuant to section 47B of the FTA, there are also new obligations applying to intermediaries, such as agents or brokers, who must now take reasonable steps to ensure that their customers have been made aware of the existence of any commission or referral arrangements where the intermediary, broker or agent receives a financial incentive from another supplier. Consumers must be made aware that such an arrangement exists, however the nature and value of the financial arrangement does not need to be disclosed.

Which arrangements are caught?

The changes only apply to arrangements with "Consumers". That is defined by reference to section 3 to the Australian Consumer Law, as a person acquiring goods or services where the amount paid for those goods or services does not exceed $40,000.00, or if the goods or services exceed this amount, they are of a kind ordinarily acquired for personal, domestic or household use or consumption. Most importantly, this can include business to business transactions, where it falls within this scope.

Note also that, from 1 July 2021, the definition of Consumer included in the ACL will be extended, with the threshold of $40,000.00 being increased to $100,000.00. This will significantly expand the scope of arrangements requiring that the new disclosure requirements be met.

Transition period

To enable businesses to adapt to these new laws, Fair Trading is giving businesses until 31 December 2020 to comply with the new obligations. In the interim, businesses will not be penalised by Fair Trading for non-compliance, however it will be expected that businesses which have been made aware of these new laws will take the required steps to ensure that their customers are aware of their rights.

The "reasonable steps" test

Businesses are obliged to take "reasonable steps" to meet the new requirements. Fair Trading notes that this will involve at least the following:
  1. The steps taken to disclose are reasonable in the circumstances; and
  2. The steps taken to disclose are sufficient in creating awareness in the consumer.
Fair Trading goes on to say that the most effective way for businesses to take reasonable steps to disclose is to be "clear, upfront and automatic" with their Consumers. A clear disclosure will be easy to understand and will not require the Consumer to seek out the information themselves. To ensure uniform compliance, businesses should incorporate a mechanism for automatic disclosure to be a standard part of each transaction.

Fair Trading has suggested some examples of ways in which businesses or intermediaries can ensure they meet their disclosure obligations:

For key terms and conditions:

  • include a short, plain language summary on the front page of each contract;
  • provide the Consumer with important information at key times, such as when they are at an online payment page;
  • make information appear to Consumers in a scrollable textbox when online; or
  • use illustrations or colour to highlight and explain important information.
For commission or referral arrangements:

  • provide the Consumer with disclosure on quotations;
  • direct customer attention using appropriate signage;
  • disclose relevant information online on the same page as the description of the product or service;
  • have the disclosure appear as a pop-up when online; or
  • include an automatic disclaimer in the footer of your emails.
Fair Trading notes that, ultimately, the best way to ensure that reasonable steps have been taken is to check with the Consumer directly that they have been made aware of such information or arrangements.

Consequences of a breach?

Significant penalties can be imposed on businesses and individuals for failures to comply with the new sections 47A and 47B of the FTA (up to $110,000 for corporations and $22,000 for individuals).

How can we help?

Suppliers now need to be wary that, if their business supplies goods or services to a Consumer, they might have certain terms or conditions of which they will need to make sure their Consumers are aware.

If these changes to the FTA affect any of your business contracts, McCabe Curwood can assist you with reviewing your operations to ensure that you are taking reasonable steps to make your customers aware of any prejudicial terms or conditions or any commissions. This will involve a consideration of relevant terms or conditions and of the tools that are available and most suitable for your business arrangements.

Please contact Mathew Kaley, Michele Izzo or Toby Carter from our Corporate team for any assistance.


Toby Carter Special Counsel
Emma Connolly Law Graduate