Unfair contracts: consumers

Financial firms must provide clear and fair contracts, and cannot enforce unfair terms. 

You may find it helpful to know:

  • how to spot an unfair or unclear contract term
  • what action we can take
  • how to report it to us
  • how to get more information about your rights 

How to spot an unfair contract term

A contract term can be unfair for many reasons, such as where it:

  • allows the firm to change the terms of the contract, without telling you as soon as possible or explaining why it has
  • binds you to hidden terms
  • excludes or limits your legal rights unfairly
  • charges a disproportionately large sum if you do not fulfil your obligations under the contract

A contract term can be unclear for many reasons, such as where it:

  • could be read in more than one way and the contract does not make it clear how the term is meant to be interpreted
  • does not use clear or prominent wording to describe the product or service being supplied under the contract
  • does not use clear or prominent wording to let you know the cost of the product or service

However, a term is not necessarily unfair or unclear because it looks like one of these; it depends on the details of the contract as a whole.

Action we can take

We have powers to challenge unfair terms in consumer contracts. We can look at contract terms relating to most financial products and services. This includes bank, building society and credit union accounts, savings and investment products, insurance, mortgages, consumer credit products (including payday loans, credit cards and unsecured loans) and pension products.

When we find a contract term that we think is unfair (and which may cause significant disadvantage to a number of consumers), we can ask the firm to stop using and/or change the term. If the firm does not agree to this, we may seek an injunction to stop the firm using the term.

Ultimately, only a court may determine whether a term is unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) and the Consumer Rights Act 2015 (CRA). The UTCCRs and their previous version (the Unfair Terms in Consumer Contracts Regulations 1994) apply to consumer contracts entered into between 1 July 1995 and 30 September 2015, and the CRA applies to consumer contracts entered into from 1 October 2015 onwards. In addition, only a court can determine whether a term has been drafted unclearly.

Please note that the CRA and UTCCRs do not apply to terms that:

  • appear in contracts between businesses
  • appear in contracts between two private individuals
  • appear in contracts where one party is not acting in a capacity as a consumer or where an individual enters into a contract for business purposes
  • for the CRA, appear in contracts entered into before 1 October 2015, or for the UTCCRs appear in contracts entered into before 1 July 1995
  • use clear (and in the case of the CRA also prominent) wording to set the price or define the product or service being supplied

Report an unfair contract term

If you think a contract term is unfair, use our unfair contract checklist to find out if we can deal with it. You can then use our online form to report an unfair contract term to us. We will decide whether to take action by looking at a number of factors, such as the number of consumers that may be affected and the amount of loss they could suffer. Our powers do not allow us to consider any terms in contracts that have been entered into before 1 July 1995.

We consider every single report of an unfair or unclear term referred to us.

We appreciate the time and effort spent by consumers in identifying potentially unfair contract terms in consumer contracts. Past reports of unfair contract terms have helped us to:

  • ask firms to stop using and/or change the terms
  • publish some actions such as undertakings from firms about unfair terms
  • obtain redress for consumers

Please visit our library page for details about actions that we have made public.

We may contact you if we require additional information that would assist us. We will not normally be able to discuss our investigations or findings with you, for example, for reasons of confidentiality.

There are some circumstances where we may need to share your complaint, including your personal data, with other regulators who have the power to take action independently or alongside the FCA. For example, we may do this where your complaint does not relate to a firm authorised by us, where another regulator is better placed to investigate your complaint, and/or where we are obliged to do so for legal reasons. Where possible we will remove your personal data before sharing your complaint with another regulator, however sometimes we will need to also share your personal data with them. To learn more about how we use your personal data, please read our privacy notice here.

Reporting unfair terms is essential to help us protect consumers. However, for some queries, this form is not the appropriate place to use to report issues. For example, if you have concerns about the conduct of a firm, it may be appropriate for you to report it here instead.  

How to complain

If you are unhappy with a financial product or service, find out how to complain. You can get more information about your rights from the Citizen’s Advice Consumer Helpline.

Please be aware that we cannot resolve individual disputes you have with a firm or arrange compensation on your behalf.