news & lobbying

Our Opinion - What do we think of Unfair Contract Terms?

It might be a good time to set out our own views here on unfair contract terms, changing contract terms with clients and variation clauses.

• Firstly, it is a client’s free choice to deal with a firm or not
• Secondly, if a client is not happy about changes you make to their contracts, they will tell you
• Thirdly, if a client is not satisfied with your response or any action you take to make changes, they are able to take their business elsewhere.
• Finally, provided you have done your best to make things clear, fair and not misleading then no client should have any cause to then object to the terms offered by you.  If they are not sure or they were not sure then they should not have appointed you.

Does the FSA empathise with us?  The reality

This is something the FSA cannot possibly understand. They are funded by firms in the financial services sector where, if we do not pay our fees, we get de-authorised and put out of business.   They also have a great pension scheme.

Additionally, they will never lose their jobs because their clients (i.e. us, regulated firms) are unhappy or disagree with the way they are treated.

Avoiding Unfair Contract Terms and ensuring Treating Customers Fairly should be automatic anyway

In the commercial World, if we do not keep our clients happy, they will go somewhere else and they will tell others about their bad experience. The more clients this happens with, the less turnover we have and the greater the opportunity for us to go out of business.

It is therefore in everyone’s interests to use fair terms in contracts but not in such a way that firms are taken advantage of by 'bandwagon' compensation hungry former clients, ambulance chasers, Financial Ombudsman or the FSA. 

Conflict of interest?

The FSA requests that we, as IFAs, make our suitability reports shorter and less complex, this we are sure is a conflict of interest to what our Professional Indemnity insurers require i.e. to minimise the risk of financial loss by documenting our advice to clients correctly and accurately.

Whoever said the customer is always right, needs some serious psychological evaluation and needs to run a business for a while, particularly in the financial services sector.

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