On the 25 July the Law Commission and the Scottish Law Commission published the scope of a consultation to consider scope and effectiveness of unfair terms management in consumer contracts including which terms should be capable of being assessed for fairness. 

The consultation follows on from work undertaken by the Commissions in 2005.  In particular they consider the issue of whether terms relating to the price or main subject matter of a contract, which are currently exempt from review for fairness under the Unfair Terms and Consumer Contracts Regulations 1999, should be capable of being assessed unless they are phrased in sufficiently transparent and prominent terms.  This is an issue which is a hangover from the Bank Charges Case and it has been obvious that at some stage further discussions would be had as to the nature of regulation in this area. The Government do not have a free hand given the Unfair Terms and Consumer Contract Directive of 1993.

The consultation could lead to quite a material change in approach for those dealing with the consumers especially in the default/administrative fee charging areas and potentially in connection with packaged accounts.

The consultation is open until the 25 October 2012 and needs to be the subject of quite robust consideration and review by the industry and trade associations given its potential impact.

The consultation is available via the following link: