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Unfair terms in consumer contracts regulations

Last reviewed 06/05/2014: any recent updates in this colour.

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The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) (the Regulations) recognise that, in many circumstances, consumers have no power or influence over the details of the terms which they are asked to agree to when entering into consumer contracts. The purpose of the Regulations is to set a framework within which firms must work when drawing up their contact terms and conditions, and appoints certain third parties (known as "Qualifying Bodies") who are authorised to challenge firms when they think a particular term is unfair. 

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In 1993 the European Union published a Directive on unfair terms in consumer contracts (Council Directive 93/13/EEC). The Directive was implemented in the UK via the Unfair Terms in Consumer Contracts Regulations 1994, which came into force on 1 July 1995. The regulations were amended in 1999, when a new Schedule 1 was added specifying a number of "qualifying bodies" (QBs). These QBs are empowered to consider whether a particular term in a contract appears unfair under the Regulations and to challenge a company about its use of that term. The Regulations were further amended in 2001, when the then Financial Services Authority (FSA) was added to the list of QBs. The FSA and Office of Fair Trading (OFT) decided at that time that the FSA would take lead responsibility for enforcing the Regulations for most contracts in the areas of investments, pensions, life and general insurance, mortgages and banking.

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FSA statement of good practice – published May 2005
In May 2005 the FSA published a Statement of good practice (SGP) setting out its views on the interpretation of the Regulations. 

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FSA report on the fairness of terms in consumer contracts - published June 2008

In June 2008, the FSA published a report to inform firms of its findings from a project to measure the awareness of and compliance with the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) in the financial services industry. This includes examples of good and poor practices in relation to the fairness of terms in consumer contracts.

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