Information Bulletin No.3
GUIDANCE ON
documentation requirements in respect of:
1. The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008; and
2. Unfair Contract Terms guidance from the Office of Fair Trading
A bulletin to provide information about the matters it is recommended that plan providers should consider, and the Funeral Planning Authority will consider when considering applications for registration
This bulletin represents the view of the Funeral Planning Authority and may be updated at appropriate intervals.
Further information about the Funeral Planning Authority can be obtained from the Chief Executive at:
Knellstone House
Udimore
Rye
East Sussex TN31 6AR
Tel: 0845 6019 619
This bulletin has been produced by the Funeral Planning Authority (“the Authority”) to ensure that providers of funeral plans registered with the Authority are aware of two recent changes in legislation and guidance which may affect their documentation, specifically:
(1) The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 – see website link http://www.opsi.gov.uk/si/si2008/pdf/uksi_20081816_en.pdf
(2) Unfair Contract Terms guidance from the Office of Fair Trading (September 2008) (Unfair Contract Terms) – see leaflet reference 311 under website link http://www.oft.gov.uk/advice_and_resources/publications/guidance/unfair-terms-consumer.
The Cancellation of Contracts regulations describes its scope in terms of the contracts it applies to (Regulation 5) and those it does not apply to (Reg 6): for example, under Reg 5, this legislation applies to funeral planning contracts which, inter alia, are entered into in the customer’s home or place of work.
For contracts to which these regulations apply:
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the customer has a right to cancel the contract within the cancellation period of 7 days starting with the date of receipt by the customer of a notice of the right to cancel (Reg 7)
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the notice must contain prescribed information (Reg 7.(3)) and include a detachable slip which customers may use (but not obliged to) to exercise their right to cancel the contract (Reg. 7.(3)(d)(ii))
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where the contract is in writing, the notice must be incorporated in the same document (Reg 7.(4)) and be in a prescribed form (Reg 7.(5)).
See also Schedule 4., Parts I and II for more detailed information.
The regulations then go on to describe how customers exercises their rights; the cancellation of contracts commenced before expiry of the notice period (which apply to at need funeral contracts); etc.
Customers’ rights under these regulations are protected by making void any provision in the contract that purports to limit their rights under these regulations (Regulation 15).
Unfair Contract Terms guidance
The guidance includes the following advice:
- “A requirement to pay more in compensation for a breach than a reasonable
pre-estimate of the loss caused to the supplier is one kind of excessive penalty” (Para. 5.1);
- “A penalty that states a fixed or minimum sum, to be paid in all cases, will be open to challenge if the sum could be too high in some cases” (Para. 5.4);
and that:
“Such a requirement will, in any case, normally be void to the extent that it amounts to a penalty under English common law” (Clause 5.1).
Consequently, it is important to ensure that funeral planning contracts do not offend these guidelines.
© Funeral Planning Authority – December 2008