Summary

ETA Services Ltd (ETA) has made changes to a term in its Cycle Insurance Policy. The policy is
underwritten by UK General Insurance Limited (UKGIL), on behalf of Great Lakes Insurance SE
since 1 April 2016 and on behalf of Ageas Insurance Limited between 1 April 2012 and 31
March 2016.

ETA has given us an undertaking, under the Consumer Rights Act 2015 (the CRA), in relation
to a term that sets out the firm’s right to exclude a claim where an approved lock has not been
used in certain circumstances. This is because we had concerns that the term was not
sufficiently transparent, as the term contradicted another term in the policy. As a result, we
were concerned that consumers may be confused about whether they were covered under the
policy, and therefore whether they could make a claim.

We summarise our concerns and the action the firm has taken below.

Why did we have concerns?

There were two terms in the policy which in our view contradicted each other.

The first term stated cover would not be provided in the event of theft “where the bicycle has
not been secured through its frame using an approved lock”. However, the second term
relating to the theft of bicycles left unattended in communal buildings stated that cover would
not be provided unless “the bicycle has been secured through its frame to an immovable
object”.

In our view, the second term did not specify that an approved lock was needed, and
contradicted the first term. This could have caused confusion to consumers about the
circumstances in which they needed to use an approved lock to ensure they were covered by
the policy.

We also had concerns that ETA had rejected claims by consumers because an approved lock
had not been used for bicycles left in communal buildings.

What has the firm done?

ETA has agreed that the relevant terms were not as clear as they could have been.

The firm, together with UKGIL, has reviewed the terms. ETA has told us that contracts entered
into since 1 April 2019 contain new terms which are clear that consumers need to secure their
bicycles using an approved lock when left in communal buildings, in order to be covered under
the policy. This includes new consumers and renewing consumers.

In addition, the firm has told us that renewing consumers will be provided with information
about the change in their renewal documentation. Chats and call scripts will also be updated to
help bring the changes to the attention of consumers.

ETA has confirmed that existing consumers will have their claims assessed for theft of their
bicycles from communal buildings without the use of an approved lock being a factor in
considering the claims.

The firm has told us that the terms have been used in their policies since 2012. ETA and UKGIL
have reviewed past claims and redress has been paid to five consumers where claims were
rejected because the consumers did not use an approved lock when securing their bicycles in
communal buildings.

The firm has fully cooperated with us in resolving our concerns.

What does this mean for consumers?

The change that ETA has made should ensure that consumers are provided with greater clarity
and certainty about the circumstances in which an approved lock must be used to secure their
bicycles.

Until the new term is in use, the firm has committed to applying the existing wording in a fair
way.


Undertaking from ETA Services Ltd

ETA Services Ltd has given this undertaking to the FCA under the Consumer Rights Act 2015
(the CRA) in respect of its Cycle Insurance Policy Wording which applied to contracts entered
into between 1 October 2015 and 31 March 2019. The policy is underwritten by UK General
Insurance Limited (UKGIL), on behalf of Great Lakes Insurance SE since 1 April 2016 and on
behalf of Ageas Insurance Limited between 1 April 2012 and 31 March 2016.

ETA Services Ltd Cycle Insurance Policy Wording

Term 5 of the “Exclusions applicable to theft and damage” contained in the relevant Cycle
Insurance Policy Wording stated:

“5. Theft where the bicycle has not been secured through its frame using an approved
lock.”

“8. Theft or attempted theft of the bicycle(s) whilst left unattended at any time unless:


a) The bicycle is secured through its frame by an approved lock to an

immovable object, or;


b) It is in a building classified as a) house, b) garage/outbuilding, c) flat, d)

room, e) shed,

where all external doors and windows are locked and theft is occasioned by a forcible
and/or violent entry.

In this instance, the bicycle must be stored out of sight


c) It is in a building classified as

f) communal hallway,
g) communal outbuilding,
h) purpose-built bike container


where all external doors and windows are locked and the bicycle has been secured through
its frame to an immovable object.

In this instance, the bicycle must be stored out of sight.”

Applying the CRA

We considered the transparency of terms 5 and 8(c) in light of the CRA and relevant case law.

Under Section 68(1) of the CRA, firms are required to “ensure that a written term of a
consumer contract….is transparent”. Under Section 64(3) of the CRA, a term is transparent if
“….it is expressed in plain and intelligible language and (in the case of a written term) is
legible.”


In our view, terms 5 and 8(c) were likely to be considered insufficiently transparent under the
CRA as it was not clear when the consumer needed to use an approved lock. Term 5 of the
policy appeared to exclude any theft where the bicycle had not been secured with an approved
lock. However, term 8(c) referred to the bicycle being secured to an immovable object, with no
reference to the use of an approved lock. In our view, the terms appeared to contradict each
other. This could have caused confusion to consumers about when they needed to use an
approved lock to ensure they were covered by the insurance. Under Section 69(1) of the CRA,
where a contract term in a consumer contract could have different meanings then it must be
applied in the way that is most favourable to the consumer.

How the term has been changed

ETA Services Ltd has informed us that the wording was included in the policy since 2012. The
firm has also informed us that the terms had been applied to reject claims where an approved
lock had not been used in the circumstances listed in term 8(c).

The firm has agreed that the relevant terms were not as clear as they could have been under
the CRA.

New and renewed contracts entered into since 1 April 2019 contain new terms which clarify
that theft or attempted theft from communal buildings where the bicycle is not secured using
an approved lock is excluded.

ETA Services Ltd has confirmed that it will not reject claims for theft in buildings classified as
communal hallways, communal outbuildings and purpose-built bike containers as a result of
the consumer not using an approved lock in existing policies that contain the unclear wording.


Other information

The firm was fully cooperative in providing this undertaking.

Undertaking published 26 June 2019


Legal information

As a Regulator, we, the Financial Conduct Authority (FCA), can challenge firms using terms
that we view as not being transparent under Part 2 of the Consumer Rights Act 2015 (the
CRA). We review contract terms that we come across in our supervision of firms. This includes
contract terms that are referred to us by consumers, enforcement bodies and consumer
organisations. This has led to ETA’s undertaking to replace the term that we consider is likely
not to be transparent.

The FCA has a duty under Schedule 3 of the CRA to notify the Competition and Markets
Authority (the CMA) of the undertakings we receive. The CMA may publish details of these
undertakings, which it puts on www.gov.uk. We also publish the undertakings on our website.
Both publications will name the firm and identify the specific term and the part of the CRA that
relate to the term’s transparency.


Even if firms have not given an undertaking or been subject to a court decision they should
remain alert to undertakings or court decisions concerning other firms as part of their risk
management. These will be of potential value in showing the likely attitude of the courts, the
FCA, the CMA or other regulators to similar terms or terms with a similar effect.

Ultimately only a court can determine the fairness or transparency of a term and, therefore,
we do not recommend terms that have been revised by a firm to address our concerns as
being definitely fair or transparent. We cannot approve terms for the purposes of the CRA; it is
for firms to assess the fairness and transparency of their terms and conditions under the CRA
and in the context of the product or service in question.

It is important to bear in mind that wording that is fair or transparent in one agreement is not
necessarily fair or transparent in another. Where we accept an undertaking given to us from a
firm to revise a term, this means that, on the evidence currently available we consider the
term to be improved enough that further regulatory action is not required.