Unfair contract terms expose firms to redress claims
Unfair consumer contract terms are unenforceable and can require redress, the Financial Conduct Authority (FCA) says. Firms must meet fairness and transparency requirements under the Consumer Rights Act (CRA) 2015.
Storage fees and rejected claims
A crypto firm removed excessive storage fees that could exceed £40,000 a year and compensated inactive customers after FCA intervention.
A financial adviser amended a term charging £800 for handling a complaint; the FCA found it unfair, a deterrent to legitimate complaints and inconsistent with its rules and Consumer Duty.
A travel insurer clarified what constituted a 12-hour delay and paid £18,000 for wrongly denied claims.
A lender clarified costs and cancellation rights before launching a credit product following scrutiny during authorisation.
The FCA expects firms to amend or delete problematic terms, stop relying on them in existing contracts and compensate harmed consumers.
It can seek injunctions and court-ordered redress, or obtain voluntary CRA undertakings.
Fair wording must survive practice
The FCA identifies terms through supervision, social media and external referrals, considering its rules, guidance and Consumer Duty when choosing action.
Firms must consider consumers' legitimate interests, use plain language and make fees, cancellation rights, variations, exclusions and complaints terms prominent.
Regular reviews must reflect requirements, rulings, judgments and outcomes data.
Firms must test customer understanding, train staff to meet contractual standards and use complaints to identify and correct unfair or unclear terms.
Fine print offers no protection
Putting a charge in a contract does not make it fair or enforceable.
The FCA's cases show that both excessive fees and ambiguous wording can require compensation.
Consumers can report concerns through its form; every report is considered, even when the FCA cannot disclose its response.