May 17, 2018 / 6:44 AM / in 5 months

FCA issues draft guidance on changing contract terms

LONDON (Reuters) - Britain’s markets regulator on Thursday issued draft guidance to financial companies to ensure customers are treated fairly when contract terms and conditions are changed.

FILE PHOTO: The logo of the new Financial Conduct Authority (FCA) is seen at the agency's headquarters in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren

The guidance, which is being consulted on, outlines the factors companies need to consider under the Consumer Rights Act when drafting and reviewing such ‘variation terms’ in consumer contracts, the Financial Conduct Authority said.

Among the issues the draft guidance says companies should address are why the term needs to change, the transparency of the variation term, as well as giving customers the chance to exit the contract if they do not like the new terms.

The FCA said it did not plan a systemic review of the fairness of variation terms in contracts entered into prior to any eventual final guidance being issued.

“Our day-to-day unfair terms case work has considered variation terms from a variety of products and does not suggest that variation terms have generally been used in a manner likely to cause widespread harm to consumers,” it said in a statement.

Reporting by Simon Jessop; editing by Carolyn Cohn

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