Undertaking
Introduction
As a qualifying body under the Unfair Terms in Consumer Contracts Regulations 1999 (the
Regulations) we can challenge firms that are using terms we view as unfair. We review
contract terms referred to us by consumers, enforcement bodies and consumer organisations,
among others. Our review of Jarvis Investment Management Plc's Signature ISA, PEP and
Nominee Account terms has led to the firm undertaking not to use certain terms that we
consider unfair.
Under the Regulations we must notify the Office of Fair Trading (OFT) of the undertakings
we receive. The OFT has a duty to publish details of these undertakings and they appear on
its Consumer Regulation Website. We also publish details on our website. Both publications
will name the firm, identify the specific terms and explain why we think they are unfair under
the Regulations.
Even if firms have not given an undertaking, or been subject to a court decision under the
Regulations, they should remain alert to undertakings or court decisions concerning other
firms as part of their risk management. These could give an indication of the view that the
courts, the FSA, the OFT or other qualifying bodies may take of similar terms or terms with
similar effects.
Jarvis Investment Management Plc undertaking in relation to its Signature ISA, PEP
and Nominee Account Standard Terms and Conditions
Name of Jarvis Investment Management Lead FSA
business Plc organisation
Trading Investment – Asset Contract Signature ISA, PEP and
sector Management identifier Nominee Account Standard
Terms and Conditions
(November 2005 version)
Original terms
'12.1 You will pay us a fee for our services in accordance with our published rate of Account
Charges from time to time. Details of the rates of Account Charges are available on request and
may be amended at our sole discretion from time to time.'
'25 Whole Agreements and Amendments
Except where the Rules and Regulations and the law states otherwise, the terms and conditions
of this agreement shall be limited to those terms and conditions set out in the Agreement
Documents. No other terms and conditions shall apply. The terms of the Agreement Documents
and, accordingly, this agreement, may be varied by us by giving reasonable written notice to
you.'
Application of the Regulations
We were concerned with the fairness of clause 12.1 because it gave the firm sole discretion to
vary the rates of its account charges without requiring the firm to give valid reasons for making
such variations. In our view, the term caused a ‘significant imbalance in the parties’ rights and
obligations under the contract, to the detriment of the consumer’ and so was unfair under
Regulation 5(1). This view is supported by the indication in paragraph 1(j) of Schedule 2 that
terms which have the object or effect of ‘enabling the seller or supplier to alter the terms of the
contract unilaterally without a valid reason which is specified in the contract’ may be regarded as
unfair.
We also considered the fairness of clause 12.1 in light of paragraph 2(b) of Schedule 2, which
gives an indication as to when a variation term is less likely to be unfair. However, this did not
lead us to conclude the term was fair because the contract did not oblige the firm to notify
consumers of the variation and consumers were not free to leave the contract if they did not
accept the variation.
The first sub-paragraph of paragraph 2(b) suggests that terms that enable a firm to unilaterally
change without notice charges for financial services under the contract are less likely to be unfair
if there is a valid reason for that change, the contract provides for the firm to give the consumer
notice at the earliest opportunity thereafter and the consumer is free to dissolve the contract
immediately.
The second sub-paragraph of paragraph 2(b) suggests that terms that enable a firm to unilaterally
change the terms of the contract are less likely to be unfair if, in a contract of indeterminate
duration, the contract provides for the firm to give consumers reasonable notice in advance of
making the change and consumers are free to dissolve the contract.
Similarly, we were concerned with the fairness of clause 25 because it gave the firm complete
discretion to vary its terms and conditions without requiring the firm to give valid reasons for
making such variations. We thought the term caused ‘a significant imbalance in the parties’
rights and obligations arising under the contract, to the detriment of the consumer’ and so was
unfair under Regulation 5(1), and that this view was supported by paragraph 1(j) of Schedule 2.
We also considered the fairness of clause 25 in light of the second sub-paragraph of paragraph
2(b) of Schedule 2. However, this did not lead us to conclude the term was fair because,
although the term obliged the firm to give consumers reasonable written notice of changes to its
terms, consumers were not free to leave the contract if they did not accept the variation.
How the terms have changed
The firm has amended the terms so that clause 25 is now the sole variation clause, allowing the
firm to amend its terms and conditions, including its fees. The new clause 25 provides that:
amendments can only be made for valid reasons;
certain valid reasons are specified in the contract;
if amendments are made for valid reasons not specified in the contract, consumers will be
able to exit the contract freely; and
consumers will be given 30 days' advance notice of any amendment, except in relation to
amendments made to reflect changes of applicable law or regulation.
New terms
'12.1 You will pay us a fee for our services in accordance with our published rate of Account
charges from time to time. Details of the rates of Account Charges are available on request.'
'25 Whole Agreements and Amendments
25.1 Except where the Rules and Regulations and the law states otherwise, the terms and
conditions of this agreement shall be limited to those terms and conditions set out in the
Agreement Documents. No other terms and conditions shall apply.
25.2 We may amend these terms and conditions (including changes to applicable fees and
commissions) by giving you at least 30 days notice. We will only make changes for good reason
including but not limited to:
25.2.1 Making them clearer and more favourable to you.
25.2.2 Reflecting legitimate increases or reductions in the cost of providing the service to you.
25.2.3 Providing for the introduction of new systems, services, changes in technology and
products.
25.2.4 Rectifying any mistakes that may be discovered in due course.
25.2.5 Reflecting a change of applicable law or regulation.
25.3 If we amend these terms and conditions for valid reasons that are not specified in this
agreement and you are not happy with those changes, we will waive the existing Account
Transfer/Closure fee should you wish to transfer or close your Account.
25.4 Any amendment which is made to reflect a change of applicable law or regulation may take
effect immediately or otherwise as we may specify.'
Other information
The new terms came into effect in August 2008.
The firm undertakes not to rely on the original terms, or similar terms with the same effect, in
contracts already entered into with consumers and not to include them in any new contracts it
enters into with consumers.
The firm was fully cooperative in agreeing this undertaking.
Undertaking published 4 February 2009