View more on these topics

Regulator tells Abbey Life to alter unfair Omo clause

The FSA has ordered Abbey Life to change an unfair term in its open market option application forms.

The regulator says that the term did not explain what costs the consumer was indemnifying the company aga- inst and that the conditions were drafted too broadly.

Under FSA rules, a contract term will be regarded as unfair “if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.

The FSA says: “It was not clear to us that the firm would only hold consumers responsible for losses or costs it incurred if those losses were directly attrib- utable to the consumer’s carelessness or dishonesty.

“In our view, this caused a significant imbalance in the contract to the detriment of consumers.”

Abbey Life has changed the term to clarify that the consumer is responsible for losses and expenses incurred by the firm as a result of the consumer’s carelessness or dishonesty.

The FSA says: “The firm has advised that it has not and will not rely on the old term, or any term with the same or a similar effect in this or any other existing contracts in an unfair way.

“The firm is in the pro- cess of changing its retirement pack, which includes the open market option application form, to include the new term from December 31.”

Hargreaves Lansdown pension analyst Nigel Call-aghan says the FSA is beginning to tighten its net around the worst-offending insurance companies as far as the quality and clarity of information for investors at retirement.

He comments: “This act- ion is to be welcomed. It is a huge move in the right direction and we would like to see more of the same from the FSA.”

Abbey Life was unavailable for comment on the issue.

Recommended

AMPS elects new committee

Following its recent AGM, the Association of Member-Directed Pension Schemes has announced its new committee for the year ahead.

Taking cover

Norwich Union recently decided to withdraw some of the unemployment-only cover that it underwrites for Paymentshield and Select & Protect and the move has brought concerns that unemployment cover will be increasingly difficult to find in a worsening economic climate.

Benefits of using a probate bare trust

Have you ever wondered what happens to someone’s investment bond on their death if it is not written in trust? When someone dies it is essential to deal with their estate, which can be made up of their home, belongings, investment bonds and anything else they may have owned. But, it is not as simple […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment