FCA rules wording in Clerical Medical contract ‘unfair’

According to a notice of undertaking published on 31 May by the FCA, the previous wording of Clerical Medical’s FAD seemed to absolve the company from all liability under the customer’s original contract.

The new wording will make clear that paying the transfer or surrender value only ends the contract and does not preclude a customer from making a valid claim against the firm, the FCA said.

Clerical Medical told the FCA it has not used the FAD as a basis for avoiding customer complaints or queries but would reword the document to avoid that perception.

In a separate case, Equitable Life also agreed to change the wording on its payment instruction form for similar reasons.

The FCA said: “We were concerned that this might deter a customer from making a claim against the firm if they thought that Clerical Medical had done something wrong, such as inappropriately invested or incorrectly calculated their funds before they were transferred or surrendered.”

A spokesperson from Clerical Medical parent Lloyds Banking Group, said: “We have amended the form of authority and discharge to better reflect its purpose, and how it is used in practice. We believe the changes will ensure the form is clearer for customers, and will address the FCA’s concerns. We will treat all customers as if they had signed the amended form.”

A spokesperson for Equitable Life said: “[The] FCA found nothing to suggest that the Society’s policyholders had been disadvantaged in any way as a result of our wording. However, having a form of words in the discharge which are clearer can only be a good thing so we have updated the form.

“In accordance with their normal procedure, the FCA have published the amendments on their website.

“There is nothing for our policyholders to be concerned about and no action is required on their part.”