The Financial Services Authority is clamping down on the use of "variation clauses" in the contract terms of a product purchase and reminding companies to make sure the terms under which contracts can be changed are known to the consumer.
A statement issued this morning by the FSA says companies are expected to write contracts for their products and services, under the terms of the regulator’s Statement of Good Practice, to ensure customers receive a fair deal. This is also likely to mean IFAs and intermediaries will have to make sure clients understand at the outset the circumstances under which interest rates or reviewable premiums could change, as the FOS has questioned the legality of certain contracts. This follows FSA analysis which suggests some firms are using contracts which give them “unilateral power to vary...
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