Introducing fairness

‘Fairness’ is at the heart of many requirements placed on suppliers when dealing with their consumers. Some measures use the term ‘fair’, while others use similar expressions like ‘reasonable’. Frequently the requirements are placed on all sectors; sometimes they are more limited. They may have their basis in statute, in the common law, in regulatory guidance or in codes of practice. Traders wishing to comply with their obligations must negotiate a complex web of requirements.

The requirement to be fair plays a particularly prominent role in the regulation of financial services firms' (hereafter ‘firms’) dealings with their consumers. An examination of this subject is particularly apt for a number of reasons. First, the Financial Services Authority (FSA) has recently set much store by its ‘Treating Customers Fairly’ (TCF) Initiative. TCF forms an important part of the FSA's efforts to place more emphasis on ‘principles-based regulation’. Secondly, recent statutory developments have imposed new fairness obligations on firms when dealing with consumers. These initiatives increase the already complex and fragmented regulatory framework in the UK.

The purpose of this chapter is to consider the meaning(s) of fairness in the context of the relationship between firms and consumers. It begins by examining the principal general statutory provisions on fairness, and then moves on to those provisions dealing specifically with financial services. Next, the main part of the chapter examines the key elements of fairness.