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RBS agrees to amend unfair contract terms

Royal Bank of Scotland and NatWest have agreed to change certain terms and conditions in consumer contracts after the FSA deemed them to be unfair.

RBS subsidiaries Ulster Bank, Coutts & Co and private bank Adam & Company have also had to amend their terms.

The unfair terms related to how the banks said they would treat payment instructions received by telephone or by fax, and their liabilities when acting on such instructions.

The terms included a clause which stated: “It is agreed that the account holder will keep the bank indemnified from and against all actions, proceedings, claims and demands which may be brought or made against the bank” as long as the instructions were subsequently checked by a return phone call from the bank.

The FSA believed the terms created a significant imbalance in consumers rights as they had the potential to be too broad, absolved the RBS Group of responsibility, and deprived consumers of protection under the Payment Services Regulations.

The FSA says: “In our view, the terms were contrary to the requirement of good faith as they had the effect of ‘contracting out’ of the protection offered to consumers by law under the Payment Services Regulations.

“The terms had the potential to operate to the detriment of the consumer in that they allocated liability for potentially significant losses to the consumer that the PSRs place on the payment service provider. They could also have acted as a disincentive to consumers seeking to challenge the authenticity of payment instructions and making valid claims for refunds.”

The terms across the group have now been amended as part of an undertaking agreed by RBS.

The FSA says the terms are improved enough so that further regulatory action is not required.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I am unaware what prompted this but it is a welcome move by the FSA and probably just the tip of the iceberg.Banks continue to rip off consumers as they attempt rebuilding their balance sheets at the nations expense.This must stop otherwise economic recovery will continue to be pushed further back.

  2. I wonder what would have happened if an IFA, Insurance Broker or Mortgage Broker had done this. Penalties? Withdrawal of permissions?

  3. Duncan – This is a change in Ts&Cs offering customers enhanced protection should they decide to interact with banks in a specific way. This has got nothing to do banks, as you put it, ripping off customers. What about this “must stop otherwise economic recovery will continue to be pushed back further”?

    I know that banks aren’t flavour of the month right now, but reading the barage of “bank bashing” comments that get posted everytime an article gets written on them, good or bad, is borderline comedy!

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