1For a consumer contract term, if the FCA decides, after notifying the Competition and Markets Authority (the CMA), to the extent required by Schedule 3 to the CRA, to address issues using its powers under Schedule 3, if the contract term is within the CRA's scope, it will, unless the case is urgent, generally first write to a person using or proposing or recommending the use of that term.
1When writing, the FCA will express its concerns about whether the term is or would be unfair within the meaning of sections 62 to 64 of the CRA, or non-transparent within the meaning of section 68 of the CRA, or purports or would purport to exclude or restrict any liability described in the sections of the CRA specified in paragraph 3(2) of Schedule 3 and will invite the person's comments on those concerns.
1If the FCA, having considered those comments, remains of the view that the term is or would be unfair or non-transparent or purports, or would purport, to be exclusionary or restrictive, as described above, it will normally ask the person to undertake to stop using, relying on or recommending it or proposing its use. It should be noted that, under paragraphs 2(3), 6(3) and 7(1) of Schedule 3 to the CRA, such an undertaking must be notified by the FCA to the CMA and any relevant complainant and then the CMA is under a duty to publish it.
1In relation to a notice to consumers within the CRA's scope, the FCA will generally, after notifying the CMA, request such an undertaking from the relevant person, if the notice causes the FCA relevant concerns, without first seeking comments. Although the FCA will, unless the case is an urgent one and time does not permit, then have regard to any representations responsive to that request.
1If, whether in relation to such a notice or such a term, the person either declines to give such an undertaking, or gives such an undertaking and fails to follow it, the FCA will consider the need to apply to court for an injunction under Schedule 3 to the CRA. The FCA will, again, notify the CMA appropriately at this stage, as required by Schedule 3.
1In determining whether to seek an injunction under Schedule 3 to the CRA against a person, after or, in an urgent case, instead of requesting such an undertaking, the FCA will consider the full circumstances of each case. A number of factors may be relevant for this purpose. The following list is not exhaustive; not all of the factors may be relevant in a particular case, and there may be other factors that are relevant such as:
whether the FCA is satisfied that the contract term or notice in question may properly be regarded, if it is used, as unfair, non-transparent and/or purportedly exclusionary and/or restrictive within the meaning of the CRA;
the extent and nature of the detriment to consumers resulting from the term or notice, or the potential detriment which could result from the term or notice;
the likelihood of success of an application for an injunction;
the costs the FCA would incur in applying for and enforcing an injunction and the benefits that would result from that action; the FCA is more likely to be satisfied that an application is appropriate where an injunction would not only prevent the use of the particular contract term or notice, but would also be likely, as paragraph 5(3)(b) of Schedule 3 to the CRA envisages, to prevent the use of similar terms or notices, or terms or notices having a similar effect.
1In an urgent case, the FCA may seek a temporary injunction, to prevent the continued or potential use of the term or notice until it can be fully considered by the court. An urgent case is one in which the FCA considers that the actual or potential detriment is so serious that urgent action is necessary. In deciding whether to apply for a temporary injunction, the FCA may take into account a number of factors, including one or more of the factors set out in paragraph 10.6.7. In such an urgent case, the FCA may seek a temporary injunction without first consulting with the person or persons using or proposing to use, or recommending the use of, the relevant term or notice.
1In deciding whether to grant an a final injunction under Schedule 3 to the CRA, the court will decide whether the term or notice in question is unfair, purportedly restrictive or exclusionary or non-transparent within the meaning of the CRA. The court may grant an injunction on such terms as it sees fit. For example, it may require the person to stop including a term in contracts with consumers or issuing, publishing, communicating or announcing a notice to consumers from the date of the injunction and to stop relying on the term in such contracts which have been concluded or on the notice to the extent that it has already been issued, published, communicated or announced. If the person fails to comply with the injunction, the person will be in contempt of court.
1The CRA provides that a term or notice that is unfair or a term that excludes or restricts liability in any of the ways specified in the CRA is not binding on the consumer. This is the case irrespective of whether there has been a decision of a court to that effect. To The CRA also provides that, to the extent that it is practicable, the rest of the contract continues in effect.