What are the key consumer rights?
Consumers have the right to buy products and services with
confidence and have rights when things go wrong. In particular,
they have the right to:
- clear and honest information before they buy;
- get what they pay for;
- be supplied with goods that are fit for purpose and services
that are performed with reasonable care and skill; - have any faults corrected free of charge, or get a refund/
replacement.
What does the consumer rights act (CRA) 2015 cover?
- what to do when goods are faulty;
- what should happen when digital content is faulty (the first time that digital content has been covered in consumer rights legislation);
- how services should match up to what has been agreed, and what should happen when they do not;
- what should happen when goods and services are not provided with reasonable care and skill;
- unfair terms in contracts;
- greater flexibility for organisations such as the FCA or Trading Standards to respond to breaches of consumer law.
How does unfair contract terms apply within the CRA?
The legislation in respect of unfair contract terms applies to consumer contracts between a business and a consumer, and to any notice that relates to the rights and obligations between a business and a consumer or purports to exclude or limit a business’s liability to a consumer.
What are the key points of ‘fairness’ within a contract?
- All terms in regulated contracts should be fair, with a contract or notice being deemed to be unfair if it causes a significant imbalance in respect of the rights and obligations of the various parties to the contract to the detriment of the consumer.
- All terms should adhere to the requirement of good faith.
- Any unfair term or notice will not be binding on the consumer unless they choose to be bound by it. Where an element of the contract is deemed to be unfair then the rest of the contract can continue to take effect, as long as this is practicable.
What terms could be deemed unfair?
— disproportionately high charges where the consumer decides not to proceed with services that have yet to be supplied;
— terms allowing the business to determine the characteristics or subject matter after the consumer is bound;
— terms allowing the business to determine the price after the consumer is bound.
What are the key points of ‘transparency’ within a contract?
- The written terms of a contract should be transparent and expressed in clear, easily understood language. If there is any doubt about the meaning of a written term, the interpretation most favourable to the consumer will be adopted.
What are the key points of ‘good faith’ within a contract?
- A term that causes a significant imbalance between the rights and obligations of the various parties to the contract to the detriment of the consumer will be deemed to be in breach of good faith.
How can the FCA challenge firms on what they deem to be unfair terms?
- request that a firm amend or remove an unfair contract
term from its future consumer contracts; and - prevent a firm from imposing the term against existing
customers by appealing to a court for an injunction.
What are the five key messages from the FCA for firms to focus on when it comes to ‘unfair terms’?
- “Firms should take into account consumers’ legitimate
interests in relation to contracts. - Fairness is not contrary to the prudent management of the
business, but part of it. - Focusing on narrow technical arguments to justify a contract
term that, in fact, may be unfair, risks future challenge. - Schedule 2 to the CRA and the UTCCRs each contain an
indicative and non-exhaustive list of types of terms that
may be regarded as unfair. The fact that a term does not
resemble any of the indicatively unfair terms listed in
Schedule 2 may not in itself, remove the risk of unfairness.
Firms need to assess whether a term is fair under the CRA/
UTCCRs as a whole and in the context of the particular
product or service. - Firms should take into account developments in legislation
and relevant case law concerning the fairness and
transparency of terms in consumer contracts.”
What types of consumer protection are in place within the financial services sector?
Legislation
Ombudsman bureau and other arbitration schemes
Voluntary codes of practice
Compensation schemes
Consumer bodies (Eg Which?)
What is ‘The Money and Pensions Service (MaPS), and what is their aim?
MaPS is an arm’s-length body sponsored by the Department for Work and Pensions, with funding through levies on the financial services industry and pension schemes.
Their aim is;
Its mission is to help individuals to manage their personal finances as well as their circumstances allow. Its aim is to deliver a more streamlined service by offering people easier access to the
information and guidance they need to help them make effective financial decisions throughout their lives. The consumer-facing brand of MaPS is MoneyHelper.
What are the five core functions of ‘The Money and Pensions Service (MaPS)?
- Pensions guidance: provision of information for the public about workplace and personal pensions.
- Debt advice: providing people in England with information and advice on debt.
- Money guidance: provision of information to enhance people’s
understanding and knowledge of financial matters and day‑to‑day money management skills. - Consumer protection: working with the government and the FCA to protect consumers.
- Strategy: working with all bodies involved in financial capability to drive significant, co-ordinated change over the longer term.
Which bodies have ‘super-complaint’ status?
Which? and Citizens advice
What is ‘Dispute Resolution: complaints (DISP)
DISP covers how complaints are to be dealt with by firms, payment providers and the Financial Ombudsman Service (FOS).
What is the FCA’s definition of a complaint?
“any oral or written expression of dissatisfaction, whether justified or not, from or on behalf of a person about the provision of, or failure to provide, a financial service, claims management service or a redress determination, which alleges that the complainant has
suffered (or may suffer):
- financial loss;
- material distress; or
- material inconvenience”.
The FCA defines an eligible complaint as what?
- a private individual, including individuals acting as personal guarantors for loans to businesses they are involved in and consumer buy‑to‑let consumers;
- a business with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m;
- a charity with an annual income of less than £6.5m when the complaint is made; or
- a trustee of a trust that has a net asset value of less than £5m when the complaint is made.
List the complaints handling procedure
Acknowledge - Acknowledge receipt of a complaint promptly, in writing
Investigate - Ensure complaints are investigated by a person of sufficient competence who, wherever possible, was not directly involved in the matter under complaint.
Resolve - Aim to resolve complaints promptly, within eight weeks
Inform - Keep the complainant updated on progress
Advise - Advise the customer that they can refer the matter to the Financial ombudsman service where a resolution cannot be found within eight weeks.
Provide - Provide the complainant with a final response letter, which must ‘adequately address the subject matter of the complaint’ and notify complainants of their right to approach the FOS within six months of the date of the letter if they are not satisfied
What are firms required to do in terms of complaints reporting and investigations?
report to the FCA on their complaints‑handling on a six‑monthly basis;
investigate the root cause of complaints and take action to prevent the recurrence of similar issues in future.
On a six-monthly basis, firms are required to report to the FCA was information regarding complaints?
total number of complaints received;
total number of complaints closed:
— within four weeks or less of receipt;
— within more than four weeks and up to eight weeks of receipt; and
— more than eight weeks after receipt;
total number of complaints:
— upheld in the reporting period; and
— outstanding at the beginning of the reporting period;
total amount of redress paid in respect of complaints during the reporting period; and
the root causes of complaints and corrective action taken to prevent
recurrence.
How long does the FCA have to respond to a ‘super-complaint’ from a designated consumer body?
90 days
What kind of information may be in a FCA response to a super-complaint?
announce plans to consult on an issue;
set out a timetable for regulatory action which would allow
the FOS to consider whether or not to place a hold or stay
on complaints;
explain how the FCA is already taking action to address an
issue; or
explain why it is not taking any action.
What does the FOS take into account when dealing with complaints?
the relevant:
— law and regulations;
— regulators’ rules, guidance and standards;
— codes of practice; and
where appropriate, what they consider to have been good industry practice at the relevant time.
What is a time-barred complaint?
A complaint made outside the time limits for referral to the FOS; a firm
may reject such a complaint, via a final response, without considering
its merits.
What are the time limits on complaints to FOS?
Complaints to the FOS must be made within six months of receiving a final response, six years of the event that gives rise to the complaint, or within three years of the time when the complainant should have become aware that they had cause for complaint, whichever is the later.
