FSA sets out standards for consumers

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FSA sets out standards for consumers

Fri 20th May 2005

The Financial Services Authority (FSA) has set out the standards that financial services firms must meet in order to ensure a fair deal for consumers.

The group has issued its Statement of Good Practice, relating to the fairness of contract terms, in order to clear up any uncertainties regarding the form of financial contracts between firms and consumers.

Anna Bradley, FSA director of retail themes, said: "Contracts define the terms of the deals customers get, but for the most part customers have no influence over what goes into them.

"The law requires firms to use contract terms that are fair and our statement sets out how firms might go about achieving this."

Problems that consumers have faced in the past have included not being properly informed of insurance premium changes, under so-called "variation clauses".

Such clauses often apply to interest rates on savings and deposit accounts and residential mortgages, and to premiums for certain life and long term health insurance contracts such as critical illness and long term care policies.

Ms Bradley pointed out that variation clauses may be of benefit to consumers, who might receive lower premiums as a result, but that the reason for the change needed to be made clear from the beginning.

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