Consumer Rights Act: The potential risk to business from unclear Ts & Cs

How many times have you sighed and reluctantly clicked ‘agree’ on the Ts & Cs button? Ts & Cs have always been more about protecting businesses rather than being understood by customers. But now a new change in customer legislation means they need to be a great deal clearer.

Section 68 of the Act makes it pretty unambiguous (appropriately enough):

Requirement for transparency

(1)A trader must ensure that a written term of a consumer contract, or a consumer notice in writing, is transparent.

(2)A consumer notice is transparent for the purposes of subsection (1) if it is expressed in plain and intelligible language and it is legible.

That means that there’s no more hiding product details, fees, penalty clauses or get-out clauses in Ts and Cs or language so opaque that even Stephen Hawking would struggle to understand it. There’s a clear business risk as regulators shift the emphasis towards businesses being clearer and more transparent. That means a lot of firms are going to have to get on the case with not just updating but completely revising some dusty old material.

Personal Finance journalist Katie Morley recently worked out that it would take fifty years to read the Ts and Cs for every product you own.  It wouldn’t be a pleasant experience, either.  She quoted Rubuss: “Most terms and conditions are written in lawyer-speak that should never see the light of day. It may as well be written in Chinese as far as most savers and borrowers are concerned.”

To be fair to most businesses, they’ve run the Plain English pencil over most of their Ts and Cs and they’re much better than they were. But where the wording is bad, it’s really bad.  Tough to understand, jargon-packed and forcing customers to flip between pages to find related material.

Some great examples of terrible terms and conditions

Even some of the UK’s biggest names in insurance, banking and telecoms are still afflicting people with Ts and Cs that belong in the crypt, not with customers.

Let’s have a look at a few that could do with, shall we say, a little Ts&C TLC...

Have everything in one place

This one is a confusing cocktail of jargon and ‘flipping’, where the customer has to flip between pages of material to find what they need.

“Where the balance outstanding under the loan facility is more than 80% of the Security Value, you are required to make monthly Capital Repayments as specified in the accompanying offer document. Your obligation to make Capital Repayments will cease as described in paragraph 12 below.”

Define your terms

Just because you put jargon in inverted commas doesn’t mean customers can understand it:

“The price at which this transaction has been made is calculated on a ‘forward price basis’. This means that it is calculated on asset values at the next transaction point following the time of the transaction.”

Make the legal comprehensible

This one’s a great example of old-fashioned legalese. A customer hasn’t a chance of understanding this.

“19.6 If a provision or part-provision is illegal, invalid or unenforceable, that provision or part-provision shall be treated as having been modified to the minimum extent necessary to make it valid, legal or enforceable and to ensure it achieves the intended commercial result of the original provision.”

Imagine every word costs you £5

Then there are the problems with length. For example, Hastings Insurance has a Car Insurance Policy that’s 19,950 words long. There are shorter novellas.  Treat material like this as though every word costs you £5 - personally.  Do you really need that extra para?

“You will enter into two separate contracts when you take out an insurance policy through us. The first contract is with us for arranging and administering your insurance policy, on your

behalf, and we shall charge you arrangement and administration fees for providing our services...”

Write like a customer, not a lawyer

It’s not always the long ones that are the worst though. Jargon’s a proper killer.  Take jargon out into the carpark and shoot it.  Replace it with normal, everyday language:

“Tracker products (including Flexclusives) are available online for customer switching up to 80% LTV. If your mortgage is above 80% LTV and if you are on the Standard Mortgage Rate (SMR) or due to revert onto the SMR, you can still apply for a tracker in your local branch.”

Forget the words

Sometimes things would be just better with diagrams (and this is from a set of Ts and Cs that have been Crystalmarked by The Society for Plain English):

“How we allocate payments

If a payment you make is less than your total outstanding balance as shown on your statement, we’ll use it as follows:

• If you have any purchase plans on your account, to make any purchase plan instalments due for that month.
• To reduce your main balance (your statement balance less any purchase plan balance).

We’ll start with the balances charged at the highest interest rate first and then reduce the lower-rate balances. If you have more than one promotional balance at the same interest rate, we’ll use your payment to reduce the balance with the promotional rate that ends first.”

What do customers REALLY need to know

You thought you were just paying monthly, not getting involved in a complex financial instrument.  Make things simple for customers to understand by giving them the information they need - not your internal processes in detail:

“Q: What will it cost me?

A: You will have to pay back the money you draw down under the agreement and pay interest, a facility fee (if charged) and any credit agreement fee you may have been charged by your broker (unless you have chosen to fund this with us, in which case it will be included in the amount you draw down under the agreement).”

Gloss over the glossary

This is from a typical feature, a legal terms glossary at the start of the document. Rather than a glossary, using clear English will make things simpler to understand:

“Sum Insured on Buildings:

means the sum specified as such in the Policy Details. Where ‘index-linked’ is shown in the Policy Details after the Sum Insured, it will be deemed to be adjusted monthly in accordance with any increase in the House Rebuilding Cost Index prepared by the Royal Institution of Chartered Surveyors.”

Compare material like this with the ‘front end’ marketing and advertising that customers see before they sign up.  There’s a hell of a gulf.

Even without the Consumer Rights Act, tough-to-understand Ts and Cs give customers the impression you’re trying to hide something - even when you’re not.  They also send the message that you care more about protecting your own business than looking after your customer.  

The irony is that, thanks to the Act, there’s probably now more business risk in opacity than clarity.

Mark McArthur-Christie is the managing director for communications specialists Rubuss.