We have completed one aspect of our work on automatic renewal, which looked into firms’ contract terms and practices regarding automatic renewal of fixed term bonds.
Background
In 2011 the FSA received a number of complaints from customers about automatic renewal of fixed term bonds. Customers were finding that, instead of their funds being accessible on maturity, they were locked up into a new bond for a further fixed period.
What we were looking at
During our review we looked at two areas:
- the fairness of firms’ automatic renewal contract terms;
- the fairness of firms’ practices.
Within the sample of firms, where we identified concerns, firms have reacted positively and taken steps to change their contracts terms and/or practices.
What to do now
We, the FCA, encourage firms who offer fixed term bonds to read our thematic review , focusing on the key findings and assessing whether they need to take action.
We are conducting some further work on automatic renewal, focusing on home and motor insurance policies, and we expect to publish our full findings in 2014.