8.4 Consumer Rights and Unfair Contract Terms

8.4 Consumer Rights and Unfair Contract Terms

Part 2 of the Consumer Rights Act 2015 (CRA) applies to consumer contracts and consumer notices. It is distinct from the current rules on unfair commercial practices in the Digital Markets, Competition and Consumers Act 2024 (DMCC Act).

Fairness, transparency and core terms

Section 62 says that a term is unfair if, contrary to good faith, it creates a significant imbalance in the parties' rights and obligations to the consumer's detriment. An unfair term is not binding on the consumer, although the consumer may choose to rely on it. Assessment takes account of the circumstances when the term was agreed and the contract as a whole.

The section 64 core exemption narrows review of genuine main-subject-matter terms and the adequacy of the price compared with what is supplied. It applies only where the relevant term is transparent and prominent, and does not protect a term of a kind on the Schedule 2 grey list. Other aspects of a price clause, such as a discretionary variation power, may still be examined. Section 68 separately requires a written consumer term or notice to be in plain, intelligible language and legible. Section 69 generally resolves ambiguity in the consumer's favour.

Section 65 goes further than a fairness assessment: a trader cannot exclude or restrict liability for death or personal injury resulting from its negligence by a consumer contract term or notice. Such an attempted exclusion is ineffective; it is not merely a potentially unfair grey-list example.

Schedule 2: indicative unfair terms

Schedule 2 is non-exhaustive and lists terms that may be regarded as unfair. A court considers the actual term and context. The following paragraph numbers are distinct:

A mortgage or investment term permitting unexplained unilateral charge changes, a disproportionate default charge, or an undisclosed termination cost should be analysed under the relevant statute and contract facts. A grey-list example does not by itself decide every case.

Unfair trading: current law

For commercial practices occurring from 6 April 2025, the unfair-practices provisions in Part 4, Chapter 1 of the DMCC Act 2024 replace and update the Consumer Protection from Unfair Trading Regulations 2008. The current regime prohibits misleading actions and omissions, aggressive practices and practices that breach professional diligence, and identifies practices unfair in all circumstances. Older conduct may still require the law applicable at its date.

The Competition and Markets Authority (CMA) and other public enforcers have roles under the DMCC Act. The FCA can use its designated-enforcer powers in financial-services contexts and also supervises firms against the FCA Handbook, fair-clear-not-misleading communications and the Consumer Duty. Do not treat the 2008 regulations as the current standalone source for new practices.

FCA and FOS treatment

The FCA can examine and challenge unfair terms used by regulated firms. In an eligible complaint, FOS can consider relevant law and rules when deciding what is fair and reasonable. It may award money or require appropriate non-money steps. For complaints referred from 1 April 2026 to 31 March 2027 concerning acts on or after 1 April 2019, the compulsory money-award maximum is £455,000; for earlier acts it is £205,000. Interest on the money award, costs and interest on costs are excluded from that money limit, and non-money directions are separate. A final ombudsman decision accepted on time binds both parties.

Primary sources: CRA 2015 Part 2 and Schedule 2, CMA DMCC unfair-practices guidance, FCA DMCC enforcement example, and FCA DISP 3.7.