On 9 May 2019, the FCA published an undertaking given by an investment management firm in relation to a term in its standard client contracts which allowed the firm to terminate the contract without the requirement to provide prior written notice.

The FCA considered that the term was likely to be considered unfair under the Consumer Rights Act 2015 and the Unfair Terms in Consumer Contracts Regulations 1999. It was concerned that if the firm was to terminate the contract without providing prior written notice, consumers may be given insufficient time to make arrangements with an alternative firm.

The FCA considered that the term caused a significant imbalance to the detriment of consumers and was contrary to the requirement of good faith because the firm could not reasonably have assumed that its client would have agreed to such a term had individual negotiations taken place.

The firm has amended the term to state that consumers will be provided with at least 20 business days’ notice in the event the firm decides to terminate their services, has informed its existing consumers of the new term and, until the new term applies, has agreed to give consumers at least 20 business days’ notice before cancelling the contract.