The Financial Conduct Authority (FCA) is consulting on new guidance outlining factors financial services firms should consider when drafting and reviewing variation terms in their consumer contracts.
Where the FCA considers a variation term in a contract to be unfair or lacking in transparency, it may take action to prevent the firm from relying on that term.
The draft guidance outlines a number of areas the FCA believes firms should have regard to when drafting and reviewing variation terms.
These include and are not limited to the following:
- The validity of the reason(s) for varying a term
- The transparency of the variation term
- Provision for notice in the variation term
- Provision for freedom to exit the contract should a consumer not wish to accept the variation