Impact of legislation on insurance - Consumer Rights Act

Question 1

Impact of the Consumer Rights Act 2015

Answer 1

Act provides protection for consumers relating to unfair terms in contracts between a consumer and a trader, seller or supplier.

Act ensures terms used in contracts are only binding on the consumer if they are fair.

“Unfair terms” are those which put the consumer at a disadvantage by limiting their rights or increasing their obligations

Terms used must be transparent and prominent

Question 2

What is a transparent term as defined in the Consumer Rights Act?

Answer 2

Transparent = plain and intelligible language (i.e it can read if the term is written down)

Question 3

What is a prominent term as defined in the Consumer Rights Act?

Answer 3

Prominent - term is brought to the customer’s attention in a way that an average consumer would be aware of the term

“Average” means someone reasonably well informed

Question 4

The Consumer Rights Act also sets out a list of terms which are regarded as unfair, what is this called?

Answer 4

The grey list - terms which exclude or hinder the consumers right to take legal action

List also includes terms which enable a trader to alter the terms of a contract without a valid reason

Question 5

If an insurer is found to use policies containing unfair terms or breaching consumer law which organisations may intervene?

Answer 5

Competition and Markets Authority or the FCA

Both have the power to amend the term and prevent it being used further.