Contract terms are still regularly unfair to consumers, despite the vast amount of information published on the subject, the financial watchdog has said.
The Financial Services Authority has published guidance to improve standards in consumer contracts. It warned that action will be taken where companies fail to improve their consumer contract terms.
“We are conducting increasing amounts of work on firms’ systems and controls in relation to the fairness and clarity of their contract terms, to identify the root causes of why some firms are failing in this area.”
The FSA said it has concerns about terms giving the firm:
- the right to unilaterally vary the contract;
- the right to terminate the contract;
- discretion to exercise contractual powers;
- the right to transfer its obligations under the contract; and
- terms that are not in plain and intelligible language.
Law firm Addleshaw Goddard said the statement is the industry’s last chance to get itself in order. “This statement could be seen as a final warning to firms to be compliant. Firms are expected to take positive and proactive action to ensure compliance with the regulations in an area the FSA seem keen to focus their attention on.”
Unfair contract terms: improving standards in consumer contracts is available on the FSA’s website.
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