Unfair contract terms library

The unfair contract terms library sets out our past undertakings, agreements and other publications regarding unfair contract terms. We also use this section of our website to update firms about the work we are doing in this area.

Latest update

We have published an undertaking from ETA Services Ltd in relation to an unclear term in its Cycle Insurance Policy. The undertaking has been provided under the Consumer Rights Act 2015 (CRA).

We had concerns that an exclusion term was not sufficiently transparent because it contradicted another term. As a result, consumers may have been confused about whether the policy covered them and whether they could make a claim. The firm fully co-operated in resolving our concerns. 

Library

We expect firms to have regard to the material published on this page. In particular, as part of their risk management, firms should remain alert to undertakings or court decisions about other firms, since these will be of potential value in indicating the likely attitude of the courts, the FCA, the CMA or other bodies to similar terms or notices or those intended to have similar effects.

This page lists undertakings given to the FCA but does not list undertakings given to the CMA, which can be found on their website, or court decisions.

In addition, we encourage firms to read the CMA’s guidance on the unfair terms provisions of the CRA. The CMA has a leadership role in relation to the enforcement of unfair terms legislation and their guidance is intended to apply to all businesses, including those in the financial services sector, which use contract terms and notices with consumers. The guidance sets out the CMA's views on how the law is intended to operate.

Firms may also wish to seek their own legal advice on unfair contract terms to take account of developments in legislation and relevant case law (including relevant CJEU case law). These developments include (but are not limited to) ensuring that a term is sufficiently transparent so a consumer can understand the consequences of the term and in particular any economic consequences of the term for the consumer.

It is ultimately for the courts to apply and interpret the unfair terms provisions of the CRA. Reading the material cannot be a substitute for taking independent legal advice.

Unfair Contract Terms Regulatory Guide (UNFCOG)

UNFCOG sets out our approach to assessing the fairness of a contract term. In UNFCOG 1.3.4(2), we state that, in deciding whether to ask a firm to undertake to stop including a term in new contracts and/or to stop relying on it in concluded contracts, we will consider the full circumstances of each case, this may include:

  • whether we are satisfied that the contract term may properly be regarded as unfair within the meaning of the CRA
  • the extent and nature of the detriment to consumers resulting from the term or the potential harm which could result from the term
  • whether the firm has fully cooperated with the FCA in resolving our concerns about the fairness of the particular contract term

Read the full text of UNFCOG.


Publications

Undertakings

As well as complying with an undertaking given for a contract for a particular financial product or service, we expect firms to take an outcomes-focused approach by assessing whether the concerns identified in that undertaking also apply to their other regulated contracts and, if so, removing the same unfair terms or terms with similar effects from those contracts as well. This is because, although an undertaking reflects our concerns with the terms in a certain contract for a particular financial product or service, it may also provide a useful guide to our views generally on the fairness of terms in standard consumer contracts. While a term may not necessarily be unfair in every type of consumer contract, firms need to satisfy themselves that all their contracts terms are fair.

Trading sector - Banking

RBS Group
Payment Services - Indemnity concerning payment instructions

March 2011

Skipton Building Society
Restricting legal rights

November 2003

Trading Sector - Consumer Credit

Capital Financial Management Limited
Cancellation terms in debt management contract

May 2019

Trading Sector - Insurance

ETA Services Ltd 
Exclusion terms in Cycle Insurance Policy

June 2019
London General Insurance Company Limited
Nationwide FlexPlus account extended warranty protection policy
July 2017

Undertaking from esure Insurance Ltd
Home and Motor insurance policies

September 2013

BISL Limited
Cancellation terms in motor insurance policies

February 2013

Card Protection Plan Ltd
Card protection terms and conditions

November 2012

AXA Insurance UK plc
Home contents and buildings insurance

February 2012

Undertaking from National House-Building Council
Review of term in new home insurance

January 2012

Legal & General Insurance
Review of certain terms and conditions in relation to the subsidence clause in its home insurance policies.

December 2011

RBS Insurance
Review of certain terms and conditions in pet insurance contracts.

November 2011

Gocompare.com Limited
Insurance Comparison Website

December 2009

Insurancewide.com Services Limited
Insurance Comparison Website

December 2009

Moneysupermarket.com Financial Group Limited
Insurance Comparison Website

December 2009

uSwitch Limited
Insurance Comparison Website

December 2009

UK Insurance Limited
Travel Insurance

September 2008

Homecare Insurance Limited
Mobile phone

July 2008

UK Underwriting Limited
Travel

May 2008

Devitt Insurance Services Limited and Screentrade
Motor

May 2008

HSA / Simplyhealth Access
Medical

November 2006

DAS Legal Expenses Insurance Company
The undertaking obtained from DAS Legal Expenses Insurance Company Ltd in July 2006 has been removed from our website. We have done this following the European Court of Justice’s (ECJ) decision concerning Erhard Eschig v UNIQA Sachversicherung AG (C-199/08) on 10 September 2009.

The ECJ ruling clarified that when recourse is had to a lawyer in any inquiry or proceedings, or whenever there is a conflict of interest, then freedom to choose a lawyer is guaranteed, and so any provisions of a contract that detract from, or qualify in any way, that freedom to choose a lawyer, would not comply with the Council Directive 87/344/EEC of 22 June 1987 on Legal Expenses Insurance (Directive) (transposed into UK law by the Insurance Companies (Legal Expenses Insurance) Regulations 1990 (Regulations)).

Removing this undertaking from our website does not detract from our requirement that all firms should have fair terms in their standard contracts with consumers.

We have sent a letter to firms reminding them of the requirement to comply with the Directive and Regulations.

July 2010

Consumer Protection Association Ltd
Deposit

July 2006

Norwich Union Insurance
Payment Protection

June 2006

Amtrust International Underwriters Ltd
Payment Protection

June 2006

Prudential International Assurance plc
Critical illness and life plans

December 2004 - Withdrawn 2 June 2016

AXA Insurance
Cash back

March 2004

PPP lifetime care plc, part of the AXA group of insurers
Critical illness and life plans

March 2004  - Withdrawn 2 June 2016

Trading Sector - Investment

James Brearley & Sons Limited 
Share dealing contract 

May 2019

Clerical Medical Investment Group Limited
Pension discharge form

May 2013

Equitable Life Assurance Society
Pension discharge form

May 2013

Investec Bank plc
Investec FTSE 100 Enhanced Kick-Out Plan 21 Terms and Conditions

February 2013

Morgan Stanley & Co International plc
Investment plan terms and conditions

February 2013 - Withdrawn 2 March 2015

Royal London Mutual Insurance Society Limited
Capital Investment Bond Policy Conditions

December 2012 - Withdrawn 2 March 2015

Jarvis Investment Management Plc
Variation Terms

February 2009 - Withdrawn 2 March 2015

Abbey Life Assurance Company Limited
Pensions

November 2008

Absolute Assigned Policies
Asset Management

December 2006

Skandia Life Assurance Company Ltd
Pensions

November 2006 - Withdrawn 2 June 2016

Britannic Assurance plc
With-Profits

November 2006 - Withdrawn 2 June 2016

Tunbridge Wells Equitable Friendly Society Ltd
With-Profits

March 2006

Sippdeal Ltd
Pensions

March 2006 - Withdrawn 2 March 2015

London Capital Group Limited
Spread betting

January 2005

Trading Sector - Mortgages

Kensington Mortgage Company Limited
Mortgage terms

January 2014 - Withdrawn 2 March 2015

Cheshire Mortgage Corporation Limited
Interest Rate Variation Terms

March 2012 - Withdrawn 2 March 2015

Chesham Building Society
Mortgage terms

May 2010 - Withdrawn 2 March 2015

National Australia Bank
Mortgages

January 2009 - Withdrawn 2 June 2016

In Retirement Services (Reversions) Ltd
Home Reversion

August 2008

Barclays Bank PLC, trading under the name of Woolwich (Barclays Bank PLC)
Variation terms

August 2007 - Withdrawn 2 June 2016

London Scottish Bank plc
In October 2006, we obtained an undertaking from London Scottish Bank Plc under the Unfair Terms in Consumer Contracts Regulations 1999. In September 2010 the undertaking was amended to reflect our updated view that it is unlikely that the level of charges which are levied in exchange for services provided can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999.

October 2006 - Amended September 2010

Blemain Finance Limited
In October 2006, we obtained an undertaking from Blemain Finance Limited under the Unfair Terms in Consumer Contracts Regulations 1999. The undertaking related to how the firm calculated the level of its early repayment charge (ERC). In September 2010 the undertaking was withdrawn from our website to reflect our updated view that the ERC levied by the firm formed part of the price the borrower pays in exchange for the service of being provided with a mortgage which operates at a fixed/discounted rate of interest for a period of time. Our updated view is that it is unlikely that the level of such charges can be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999.

September 2010

Intelligent Finance
Exit administration charges

October 2006 - Withdrawn 2 June 2016

Scottish Widows
Lifetime

September 2006

Trading sector - Payment Services

PPRO Financial Limited
Terms and conditions in contracts with VIABUY Prepaid MasterCard customers
October 2017

Trading sector - Retail Intermediaries

Beacon Financial Limited
Independent financial advice

January 2010

A P Financial Services UK Limited
Independent financial advice

January 2010

The On-Line Partnership Limited
Network of IFAs and mortgage advisors

January 2009

Hayburn Rock Associates Ltd
Independent financial advice

August 2007

 

Agreements

Agreement from AXA Insurance UK plc (as underwriter to Lloyds Banking Group)
Travel insurance policy provided as part of Lloyds’ packaged bank account

June 2013

 

Statements from firms and industry bodies

Trading sector

Statement from:

Banking - Savings Account

The Building Societies Association

September 2006

Insurance

PPI undertakings and statements

June 2006

 

Consultation papers

CP14/8: The FSA's approach to the use of its powers under The Unfair Terms in Consumer Contracts Regulations 1999

July 2002

Discussion papers

DP14/2: Fairness of changes to mortgage contracts

July 2014

Finalised guidance

FG18/7: Fairness of variations terms in financial services consumer contracts, under the Consumer Rights Act 2015 December 2018

Supporting documents to FG18/7

GC18/2: Fairness of variations terms in financial services consumer contracts, under the Consumer Rights Act 2015

CG18/2: Summary of feedback

 

May 2018

December 2018

Policy statements

PS14/8: The FSA's approach to the use of its powers under The Unfair Terms in Consumer Contracts Regulations 1999 - Feedback on CP148 and made text

July 2002

 

Speeches

Unfair contract terms – ensuring a fair deal for consumers- March 2012

Clive Gordon, Head of Conduct Specialists gave a speech at the FSA's Unfair Contract Terms Seminar

FSA's interpretation of the Unfair Terms in Consumer Contracts Regulations 1999 - January 2009
Withdrawn 2 March 2015

Treating Customers Fairly and Fairness in Contract Terms - July 2007
Withdrawn 2 March 2015

Towards fairer outcomes for consumers through principles-based regulation - May 2007
Withdrawn 2 March 2015

 

Other publications

Automatic renewal of fixed-term bonds - July 2013
Thematic Review

FSA’s response to the Law Commission’s issues paper entitled ‘Unfair terms in consumer contracts: a new approach? – October 2012
The FSA has responded to the Law Commission's issues paper entitled 'Unfair terms in consumer contracts: a new approach?'. The Law Commission asked for views in respect of its proposed amendments to the Unfair Terms in Consumer Contracts Regulations 1999 (‘the Regulations’) in light of the bank charges case of 2009 (Office of Fair Trading v Abbey National plc). The issues paper looks at possible amendments to the price exemption provision and also proposes a number of other changes to the Regulations.

Statement on using Switching Terms in mortgage contracts under the Unfair Terms in Consumer Contracts Regulations 1999 - January 2012
Finalised guidance

Unfair contract terms: improving standards in consumer contracts - January 2012
Finalised guidance - Withdrawn 2 March 2015

Legal expenses Insurance revisited - June 2011
We revisit this topic and summarise the FSA's position in relation to this legislation.

Statement regarding 'have read and understood' declarations - June 2010
Last year we published an undertaking by The On-Line Partnership Limited. The undertaking related to a term in the firm's contract requiring consumers to declare that they had read and understood the terms of the contract. We have published a statement providing further information about our views and the approach that firms should take when drafting or relying on consumer declarations of this type.

The use of commission clawback terms in Terms of Business Agreements - January 2010
The FSA published two undertakings from two different Independent Financial Advisers about terms that allowed them to claim back commission from customers. These undertakings show that terms in standard-form consumer contracts should set out the rights and obligations of customers clearly and fairly.

Responsibilities and liabilities of insurance comparison websites - December 2009
The FSA published four undertakings from four different insurance comparison websites regarding their responsibilities and liabilities for providing their comparison service. These undertakings show that terms in standard-form consumer contracts should set out the liabilities of firms clearly and fairly

FSA and firms reach agreement on MPPI - October 2009
The FSA and Mortgage Payment Protection Insurance (MPPI) firms have agreed an industry-wide package of measures for consumers, including refunds of around £60 million. The industry has acted in response to FSA concerns over increases in premiums and reductions in what customers are covered for under their policy. The FSA’s concerns centred on the terms permitting these changes, and how clearly they were disclosed.

Reminder to firms on the importance of undertakings - December 2008

A statement regarding terms which use the phrase 'consequential loss' in general insurance contracts - July 2008
The FSA published a statement regarding terms which use the phrase 'consequential loss' in general insurance contracts. In our view, a term which excludes 'consequential loss' is not written in plain, intelligible language, as it refers to an expression that has a legal meaning.

Fairness of terms in consumer contracts: a visible factor in firms treating their customers fairly - June 2008
Withdrawn 2 March 2015

Fairness of terms in consumer contracts: Statement of good practice on mortgage exit administration fees (MEAFs) - January 2007
Withdrawn 2 March 2015

Statement of Good Practice - May 2005
Withdrawn 2 March 2015

Statutory Rights

Early Repayment Charges - March 2007
The FSA published a short statement on the assessability of early repayment charges under the Unfair Terms in Consumer Contracts Regulations 1999

Memorandum of Understanding - December 2015

The FCA and CMA both have consumer protection powers in relation to the UTCCRs and the CRA.

Withdrawn material 

In March 2015 and May 2016, we withdrew some material as it no longer reflected the FCA’s view on unfair contract terms. This material is indicated in the table above. Where undertakings have been withdrawn from the FCA website, they are still binding between the firm who provided the undertaking and the FCA. However, other firms should no longer rely on the content of them as they may no longer reflect the FCA’s current view on unfair contract terms.