The investigation, being conducted by the Department for Business, Innovation & Skills, has been prompted by confusion over ‘contingent’ or ‘ancillary’ charges following the Supreme Court judgement in the OFT v Abbey National plc case in November 2009. That decision held that charges in relation to unauthorised overdrafts were part of the price for the provision of the whole package of banking services received by a personal current account customer, and thus excluded from assessment under legislation on unfair terms in standard form contracts. BIS says as a result there is uncertainty as to how UK legislation on unfair terms in consumer contracts applies to charges that are contingent, or ancillary to the core of the contract.
Scottish Life says increases in pension charges when employees leave schemes with active member discounts could fall into a category of ‘unexpected revision charges’ highlighted by BIS’s call for evidence on its consultation on the Consumer Rights Directive as a concern.
Scottish Life group head of communications Alasdair Buchanan says: “There is a very heavy duty of disclosure at the time the employee moves from the scheme, yet we think not all advisers, or even providers, are aware how strong this duty is. We believe they have a responsibility to tell members of the alternatives when they leave, such as switching to a cheaper plan. The fact that BIS is targeting this issue is, we believe, further support for our view that greater disclosure is required.”