The financial services sector and unfair contract terms
The financial services sector and unfair contract terms

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • The financial services sector and unfair contract terms
  • Unfair terms legislation
  • The role of the FCA
  • The FCA does not always have power to act
  • The steps the FCA may take in relation to an unfair contract term
  • Examples of unfair terms
  • Risks for firms
  • Recommended steps if a term appears unfair
  • Reporting unfair terms

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

The Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA) have the power, under the Consumer Rights Act 2015 (CRA 2015) (which came into force on 1 October 2015 and replaced the Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083) to challenge firms about the fairness of terms in consumer contracts (whether in standard form or individually negotiated). This Practice Note introduces:

  1. the FCA’s role and its approach as well as its Unfair Contract Terms and Consumer Notices Regulatory Guide (previously the Unfair Contract Terms Regulatory Guide until it was renamed on 1 October 2015) (UNFCOG)

  2. steps the FCA may take in relation to referrals

  3. guidance on terms that may be considered unfair as well as indications of good practice for firms aiming to prepare fair standard form client agreements; and

  4. how complaints in relation to unfair terms may be raised.

Unfair terms legislation

The Financial Conduct Authority (FCA) has powers

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