UNFCOG 1.3 The CRA2

1. (1)

   Part 2 of the CRA applies2, with certain exceptions, to a contract2 between a trader2 and a consumer. Part 2 of the CRA also applies to consumer notices2.

2. (2)

   Terms or notices2 cannot be reviewed for fairness within the meaning of the CRA2 if they2 reflect:

   1. (a)

      mandatory statutory or regulatory provisions; or

   2. (b)

      the provisions or principles of an2 international convention2 to which the United Kingdom2 or the EU is a2 party.

      1
3. (3)

   Terms which are transparent and prominent (as defined in section 64 of the CRA)2 cannot be reviewed for fairness within the meaning of the CRA to the extent that2:

   • they specify2 the main subject matter of the contract; or
   • the assessment is of the appropriateness2 of the price payable under the contract by comparison with2 the goods, digital content2 or services supplied under it2.

   However, we can fully2 review terms concerning these matters for fairness within the meaning of the CRA2 if they are not transparent and prominent2.

4. (4)

   But, the subject matter and price exemption in (3) only applies to terms. It does not apply to a term of a contract listed in Part 1 of Schedule 2 to the CRA.2

5. (5)

   It is a requirement under section 68 of the CRA that a written term of a consumer contract, or a consumer notice in writing, is transparent.2

Terms or notices2 are unfair if, contrary to the requirement of good faith, they cause a significant imbalance in the parties' rights and obligations to the detriment of the consumer.

1. (1)

   As an unfair contract terms enforcer under Schedule 5, we have powers in relation to the production of information. Under paragraph 14 of Schedule 5, an enforcer or an officer of an enforcer may give notice to a person requiring the person to provide the enforcer with the information specified in the notice.2

1. (1)

   Unless the case is urgent, we will generally first write to a firm to express our concern about the potential unfairness of a term or terms (within the meaning of the CRA2) and will invite the firm to comment on those concerns. If we still believe that the term is unfair, we will normally ask the firm to stop using or proposing or recommending the use of that term in a consumer contract2. If the firm continues to rely on that term or2 declines to give an undertaking, or gives an undertaking but fails to follow it, the FCA will consider the need to apply to the courts for an injunction under paragraph 3 of Schedule 32.

2. (2)

   In deciding whether to ask a firm to undertake to stop using or proposing or recommending the use of a term in a consumer contract2, we will consider the full circumstances of each case. Several factors may be relevant for this purpose and the following list is not exhaustive, but will give some indication of the sorts of things we consider:

   1. (a)

      whether we are satisfied that the contract term may properly be regarded as unfair within the meaning of the CRA2;

   2. (b)

      the extent and nature of the detriment to consumers resulting from the term or the potential harm which could result from the term;

   3. (c)

      whether the firm has fully cooperated with the FCA in resolving our concerns about the fairness of the particular contract term.

1. (1)

   2In relation to a consumer notice, where we are concerned about the potential unfairness of the notice, we will generally contact a firm to ask the firm to amend or withdraw the notice.

2. (2)

   The FCA can also ask a firm to undertake to amend or withdraw a consumer notice. Under paragraph 6 of Schedule 3, a regulator may accept an undertaking from a person against whom it has applied, or thinks it is entitled to apply for an injunction or interdict. The undertaking may provide that the person will comply with the conditions that are agreed between the person and the regulator about the use of terms or notices, or terms or notices of a kind, specified in the undertaking.

1. (1)

   Under paragraph 3 of Schedule 3, a regulator may apply for an injunction or (in Scotland) an interdict against a person if the regulator thinks that:2

   1. (a)

      the person is using, or proposing or recommending the use of, a term or notice to which Schedule 3 applies; and2

   2. (b)

      the term or notice:2

      1. (i)

         purports to exclude or restrict liability of the kind mentioned in paragraph 3(2) of Schedule 3; or2

      2. (ii)

         is unfair to any extent; or2

      3. (iii)

         breaches the transparency requirement.2

2. (2)

   A regulator may apply for an injunction or interdict in relation to a term, whether or not it has received a relevant complaint about the term.2

3. (3)

   The FCA is a regulator2 for the purposes of Schedule 32. Our approach to seeking an injunction under the CRA2 is set out in EG 10.

Under sections 62 and 67 of the CRA,2 an unfair term is not binding on the consumer but the contract will continue to bind the parties if it is capable of continuing in existence without the unfair term. If2 the court finds that the term in question is unfair, the firm would have to stop relying on the unfair term in existing and future2 contracts governed by the CRA.2

2Under section 62 of the CRA, an unfair consumer notice is not binding on the consumer.