Conduct issues example: Mobile trader 'signed up mental health unit patients to unreasonable phone contracts'
This article on Stuff relates to the general unfair contract law changes proposed, not just the changes likely to arise from financial services conduct review going on.
As I read it I found myself wondering: don't we already have laws against this kind of idiotic behaviour? Remember this case highlighted by the Hayne Commission: insurance sold to an intellectually handicapped young man. I always thought that none of us want this to happen, and if some fool from a call centre has done this to hit a target it was always - sooner or later - going to get discovered and reversed.
But on the other hand, has this kind of behaviour got more common? If so, then why?
Setting aside people with more severe limitations, we may all be cognitively stressed at times, and can be vulnerable to a pushy sales pitch which is exploiting some fundamental information asymmetry. I suspect that this is more common with any service (not just financial) when several of these factors combine:
- Complex services
- Information asymmetry
- Subscription or regular payments
- Hard to compare features
- Presence of a sales incentive
- Distant call-centre sales process
- Reduced or limited competition
- Infrequent purchase events, for ‘set-and-forget’ services
So, the Government has announced its intention to do the following:
- Prohibit unconscionable conduct in connection with the supply or acquisition of goods and services
- Extend the existing protections against unfair contract terms in standard form consumer contract terms to also apply to standard form business contracts with a value below $250,000.
That's probably understandable if this is become more widespread because more and more services have features like those above. You can find more information about the decisions here: https://www.mbie.govt.nz/business-and-employment/consumer-protection/review-of-consumer-law/protecting-businesses-and-consumers-from-unfair-commercial-practices/
Note, that is quite separate (but related to) the work going on that is specific to financial services. This is the context which is helpful to consider when you are looking at draft law (soon, we hope) of COFI, Insurance Contract Law, and considering the expanded remit of the FMA.