PART 2Unfair terms

What are the general rules about fairness of contract terms and notices?

63Contract terms which may or must be regarded as unfair

1

Part 1 of Schedule 2 contains an indicative and non-exhaustive list of terms of consumer contracts that may be regarded as unfair for the purposes of this Part.

2

Part 1 of Schedule 2 is subject to Part 2 of that Schedule; but a term listed in Part 2 of that Schedule may nevertheless be assessed for fairness under section 62 unless section 64 or 73 applies to it.

3

The Secretary of State may by order made by statutory instrument amend Schedule 2 so as to add, modify or remove an entry in Part 1 or Part 2 of that Schedule.

4

An order under subsection (3) may contain transitional or transitory provision or savings.

5

No order may be made under subsection (3) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

6

A term of a consumer contract must be regarded as unfair if it has the effect that the consumer bears the burden of proof with respect to compliance by a distance supplier or an intermediary with an obligation under any enactment or rule implementing the Distance Marketing Directive.

7

In subsection (6)—

  • “the Distance Marketing Directive” means Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC;

  • “distance supplier” means—

    1. a

      a supplier under a distance contract within the meaning of the Financial Services (Distance Marketing) Regulations 2004 (SI 2004/2095), or

    2. b

      a supplier of unsolicited financial services within the meaning of regulation 15 of those regulations;

  • “enactment” includes an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;

  • “intermediary” has the same meaning as in the Financial Services (Distance Marketing) Regulations 2004;

  • “rule” means a rule made by the Financial Conduct Authority or the Prudential Regulation Authority under the Financial Services and Markets Act 2000 or by a designated professional body within the meaning of section 326(2) of that Act.