When opening a new bank account, it is important to read the small print outlining terms and conditions of the contract. Consumers informed about contractual rights benefit more from products and services, and protect themselves better at time of signatory on agreement.
In research studies on the consumer banking sector in the UK, it has been shown that when considering investment agreements, consumers pay for goods and services without reading the details. Consumers are signing up for new accounts in a ‘click’, without review of fine print policies in full.
In 1999, The UK Office of Fair Trading (OFT) published guidelines to the United Kingdom’s Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). Application of the UTCCR includes terms and conditions to consumer bank accounts and credit card agreements.
Having broader implications for analogous contracts, such as those binding consumers to standard default terms (i.e. mortgage loans and store cards), the UTCCR implements European Union Council Directive 93/13/EEC ruling on unfair terms on consumer contracts. Several amendments to the law have come into force since.
UTCCR Consumer Guidelines:
1. The rule provision is intended to inform both banking institutions and their customers of written contract terms and conditions. In order for UK banking institutions to evidence diligence and fairness, they must agree to the protection of consumers. Standard terms and conditions present in bank account contracts must provide that no significant economic harm will be caused during the course of the agreement, something that’s imperative when you want to open new bank account.
2. Strict fee thresholds set to encourage safe banking practice, are restricted. No fee threshold is considered detrimental to banking customers if under rule designated limit. Threshold charges must meet the test of fairness in order to stand up in court.
Principles of fairness are part of all UK consumer banking contracts. Customers should be able to review fee thresholds prior to signature on a financial product or service. The UTCCR designated monetary threshold for OFT intervention on customer default is currently GBP £12.
3. Rules to modifications and alterations to contract should be clearly defined in stated terms and conditions to consumer banking contracts. UK law also provides for court preemption should disagreement arise. If it is determined that a contract term is unfair, the OFT has the duty to review complaints on behalf of consumers. Action taken to cease continued use of terms or attendant conditions, may be the result of court order, or interdict under Scots Law.
OFT courts share power with a range of other UK enforcers. The OFT acts to prevent harm to individual banking customers, and to protect the collective interests of consumers in the UK. The Enterprise Act 2002 supports OFT enforcement mechanisms, mandating compliance to consumer contracts.