The Australian Competition and Consumer Commission has opposed a Corporations Law Simplification Task Force proposal to remove the protection given investors, particularly small investors, by the unfair practices provisions of the Trade Practices Act.

Issuing the ACCC's submission to the task force ACCC Chairman, Professor Allan Fels, said the proposal went against the best interests of investors.

The task force has proposed that issues relating to misleading or deceptive conduct in relation to fundraising, takeovers and other dealings in securities be dealt with solely under the Corporations Law and the common law.

"Currently, under section 52 of the Trade Practices Act, an investor who suffers loss or damage from relying on such a statement can bring a successful action for damages against an issuer of a prospectus or takeover proposal, even when that issuer had met due diligence requirements of corporations law in preparing the document.

"Under the Task Force's proposal, this section will no longer be available to investors who suffer such loss or damage.

"The proposal, if adopted, would enable defences against civil claims for misleading or deceptive statements contained in prospectuses or takeover proposals on the grounds that due diligence requirements of corporations law had been satisfied.

"The ACCC is especially concerned at exempting any sectors or industries from the consumer protection provisions Trade Practices Act. Section 52 has always been a provision of general application. There is no reason that dealings in securities should be treated more leniently than other forms of commercial conduct.

"The proposal is not in the interest of small investors, for whom the protection of the Trade Practices Act is essential. This is particularly so when one considers that losses that result from fundraising documents should be borne by the issuers of those documents rather than small investors, who have little if no control over the contents of the documents."