legal updates
Thursday, 01 Jun 2006
time to review consumer contracts
Every week, the Office of Fair Trading is called on to judge the fairness of consumer contracts. Having to have “fair” contracts for consumers is quite a new thing for the UK and (other than certain limited areas like consumer credit) has been in effect for less than twenty years.
The law does however set quite a high standard, and this target is not always easy to achieve. A big issue right now is the much-publicised practice of the banks in imposing unauthorised overdraft charges. Scotland's three major banks are among the eight High Street banks that “agreed” to be taken to court last week to try to get a court to decide if these fees are actually fair. The main issue to be considered is that banks’ charges must correspond with the actual loss incurred. It is this apparent lack of balance that the OFT wants to test.
Impact of the bank charges test case
This litigation is not only of relevance to the banks and financial institutions. Surely it will bring the issue of unfair contracts to the forefront of consumers’ minds, and could impact on many consumer businesses. As in many cases, a test case like this will raise awareness of the general public far more than the law in question coming into force.
Time for review
The importance of good contracts when dealing with consumers cannot be emphasised enough. In this anti-business climate, and in particular with heightened consumer awareness, this is the time for businesses to look at their contracts and consider whether their business-friendly terms are also not too unfriendly to consumers.