FSA's interpretation of the Unfair Terms in Consumer Contracts Regulations 1999

[borgbaiter]

hi

looking thro stuff for t&c's i came across this off the FSA website (i was trying to get my mortgage fees refunded at the time) it says quite a bit i found interesting given the state of play re bank charges.


http://www.fsa.gov.uk/pages/Library/.../0113_kw.shtml



Borgbaiter

[natweststaffmember]

Re: FSA's interpretation of the Unfair Terms in Consumer Contracts Regulations 1999

"The test to determine whether a contract term is fair or not is set out in Regulation 5(1) (slide a) "a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer."
Regulation 5 is always our starting point and when we apply the fairness test, we consider the overall fairness of the particular term in the context of the contract as a whole. For instance, an unfair term in a mortgage contract might cause greater detriment to the consumer if he is unable to avoid the term by withdrawing from the contract because of various applicable fees and, possibly, an early redemption charge. By contrast, a similar term in, for example, a contract for an instant access savings account might cause little or no detriment as the consumer can walk away from it more easily.
Fairness is a wide concept and, like principles-based regulation, is not a matter of rigid requirements. So – and despite the fact that the title of this speech refers to the legal interpretation of the Regulations – it is sometimes not helpful to get caught up in a detailed legal analysis of what is, or is not, 'fair'. It may sound strange for me, as a lawyer, to say that, but we have found that sometimes it is helpful, when considering whether a term gives rise to a 'significant imbalance in the parties' rights and obligations', to take a step back and consider whether each party to the contract would have thought the term fair from the other’s perspective at the time the contract was formed between them. We find that this helps us to take a balanced approach to the issue of fairness and you might find it equally helpful if you were to adopt this, or a similar method, when drawing up, and advising on, mortgage terms.
Regulation 5 refers to the concept of good faith and, again, it can be helpful to take a rounded view of what this may mean. Good faith was dealt with in the judgment of the House of Lords in the case Director General of Fair Trading v First National Bank Plc [2001] UKHL 52 (slide b) with Lord Bingham saying that it was "not an artificial or technical concept". His Lordship explained that the requirement of good faith is one of "fair and open dealing" and that openness requires terms to be expressed "fully, clearly and legibly, containing no concealed pitfalls or traps".

[Budgie]

Re: FSA's interpretation of the Unfair Terms in Consumer Contracts Regulations 1999

Great Stuff !!

Principle 7 – Communication with Clients clear, fair and not misleading

[borgbaiter]

Re: FSA's interpretation of the Unfair Terms in Consumer Contracts Regulations 1999

A report on Fairness funded by the FSA. i really need to have some fun on a saturday nite :-). im half way thro but it seems to back up what i hear all over the place. wonder if the OFT have had similar studies doen or if there even aware of this one.


http://www.fsa.gov.uk/pubs/consumer-research/crpr38.pdf



Borgbaiter


this is really good stuff.