On , the Financial Conduct Authority issued a Undertaking to PPRO Financial Limited


PPRO Financial Limited (PPRO) has agreed to make changes to terms in its
consumer terms and conditions, dated April 2016. PPRO uses these terms and
conditions in contracts with its prepaid card customers (VIABUY Prepaid

PPRO has given us an undertaking, under the Consumer Rights Act 2015 (the CRA),
in relation to terms in its contracts relating to:

Its charging arrangements;

The cooling off period;

The consumer’s right to terminate the agreement;

The redemption fee;

The dormancy fee;

The auto-renewal of the contract; and

The jurisdiction clause.

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

Why did we have concerns?

The FCA received a referral from the Dutch regulator (Autoritiet Financiële Markten
- The Authority for Financial Markets – AFM) under the Consumer Protection
Cooperation directive1, regarding complaints it had received from consumers.
Pursuant to this the FCA conducted a review of PPRO’s terms and conditions and its
marketing practices.

We communicated a number of concerns to the firm relating to:

The way in which the contract was drafted, which meant that consumers may
not benefit from the statutory 14 day cooling off period;

The transparency and non-refundability of the card issuing fee;

The fairness and transparency of the redemption fee;

The fairness and transparency of the dormancy fee;

The transparency of the auto-renewal term; and

The fairness of the firm’s jurisdiction clause, which in conferring exclusive
jurisdiction on the courts of England and Wales, obliges a consumer not

resident in the UK to submit to the jurisdiction of a court different to their
home state.

What has the firm done?

PPRO has agreed to make the following changes to its terms and conditions:

To clarify when the contract commences so that it is clear that it starts when
the customer indicates acceptance of the terms and conditions on the firm’s

To restructure its charging arrangement, by reducing the issuing fee and
annual fee, and making these payable from the start of the contract;

To make the issuing fee more transparent;

To make the issuing fee refundable within the cooling off period, even if the
consumer has used the card;

To clarify the duration of the contract and the consumer’s right to cancel;

To improve the transparency of the term relating to the dormancy fee, and
committed to contacting consumers prior to this taking effect;

To improve the transparency of the term relating to the auto-renewal of the
contract; and

To amend the jurisdiction clause so that consumers are aware that they may
take action against the firm in the jurisdiction in which they are domiciled.

The firm has also informed the FCA that it will be increasing its cooling off period
from 14 to 21 days.

What does this mean for consumers?

The changes that PPRO has committed to making should ensure that consumers are
aware of the price of the product and relevant charges. They have enhanced
cancellation rights beyond the legal minimum, so that if consumers are not happy
with the product they can cancel, either with no charge at all during the first 21
days of the contract, or with a proportionate refund of their annual fee if they
choose to cancel subsequently. It should be clearer to consumers what their rights
and obligations are under the contract, so that they know what they would be
entering into at the start of the contract, and can shop around more effectively.

PPRO has informed us that new terms will be effective immediately for consumers
signing up for the prepaid card from 1 October 2017 onwards.

PPRO has told us it has 1.17 million existing consumers who will be affected by the
changes, and that it will email all these consumers on 30 September 2017 to
provide two months’ notice of the changes. For these consumers, the changes will

be effective from 1 December 2017. Consumers wishing to terminate their contract
as a result of the changes to the terms and conditions will be able do so, penalty

Until the new terms are in use, the firm has agreed that it will apply the existing
terms fairly.

PPRO cooperated fully with the FCA in resolving our concerns.

Undertaking from PPRO Financial Limited

PPRO Financial Limited (PPRO) has given this undertaking to the FCA under
paragraph 6 of Schedule 3 to the Consumer Rights Act 2015 (the CRA) in respect of
the VIABUY Prepaid MasterCard terms and conditions (2016).

Applying the CRA

Under section 62(4) of the CRA, a term is unfair if:

“…contrary to the requirement of good faith, it causes a significant imbalance in the
parties’ rights and obligations under the contract to the detriment of the

Section 68(1) of the CRA states that firms are required to “ensure that a written
term of a consumer contract … is transparent.” Under section 68(2) of the CRA, a
term is transparent if “… it is expressed in plain and intelligible language and it is

PPRO Terms and Conditions

PPRO has committed to making changes to its terms and conditions as follows. All
references to terms relate to the 2016 contract.

Restriction on cooling off period

Term 1.1 states ‘…By submitting your order for a prepaid product you indicate to us
that you have accepted and agree to these terms and conditions.’

Term 9.1 states ‘You are entitled to a 14 day ‘cooling-off’ period from the date that
you accept this Agreement. Should you wish to cancel your prepaid product and
this agreement please return your card together with the written letter of
cancellation to Customer Services at the Address specified at Appendix 1 unsigned
and unused within 14 days of your acceptance of this agreement and a full refund
of any fees paid to date will be made.’

Term 9.2 states ‘After 14 days from the date that You accept this Agreement all
fees and charges will be non-refundable…’

The FCA concern was that Term 1.1, read in conjunction with Terms 9.1 and 9.2,
appeared to limit the consumer’s right to cancel the card within the statutory 14
day cooling off period. This was because, amongst other things, it was not clear
when the contract started.

In order to address the FCA’s concern, PPRO will clarify that the contract
commences when the consumer accepts to be bound by the terms and conditions
on the website.

Clarity of duration of contract

Term C of Appendix 1 states ‘This Agreement shall be deemed to have come into
effect on the Date of Your acceptance of this Agreement and shall last for a period
of 3 years. If the Agreement is not terminated according to the Terms and
Conditions before the end of this period, the Agreement will be automatically
renewed for 3 years.’

However, under the ‘service’ section of the Viabuy website, it is stated ‘The contract
initially runs for three years. After this period the card can be cancelled on a yearly

The FCA was concerned that the duration of the contract was not sufficiently
transparent. This was because it was not clear whether the contract was of
indefinite duration or a fixed term of three years. It was also not clear whether the
contract would be auto-renewed for a further three year fixed period, or on an
annual basis.

PPRO will improve the language of Appendix 1 to ensure that the duration of the
contract is clear; that is, it is for an initial period of three years and is then auto-
renewed on an annual basis thereafter.

Non-refundability of card issuing fee

Paragraph 9.2 states as follows: ‘after 14 days from the date that [the consumer
accepts] this Agreement, all fees and charges will be non-refundable apart from
those currently applicable fees set out in Appendix 1 that are levied on a regular
ongoing basis and paid in advance, which shall be reimbursed proportionally on
termination of the Agreement.’

PPRO charges a card issuing fee, which covers the setting up costs of the card.
There is no annual fee for the first three years of the contract, but it is charged
annually after the first three years.

The FCA considered that all or part of the card issuing fee was a pre-payment for
the initial three year duration of the contract. The FCA was concerned that, should
consumers find that the product no longer suited them, they would be unable to
receive a pro rata refund of the card issuing fee. The FCA also did not consider the
term to be in plain and intelligible language, insofar as it was not clear as to what
fees were and were not refundable.

PPRO will change its fee structure, so that it charges a lower card issuing fee and
then a separate annual fee which is payable from year 1 rather than year 4. The
annual fee will be refundable on a pro rata basis, should the consumer wish to
cancel the contract.

In addition, the card issuing fee will be fully refundable during the initial 21 day
cooling off period, whether or not the consumer has used the card.

PPRO will also ensure that its fees and charges, and whether they are refundable or
not, are set out clearly on their website and in their terms and conditions.

The redemption fee

PPRO charges a redemption fee of 10 euros for redemptions within the first 12
months of the agreement and a refund fee of 25 euros should the consumer wish to
end the contract early (and still have unused funds on their card), as set out in
Appendix 1 (paragraph A) to the contract.

The FCA’s concerns regarding the redemption fee were principally in relation to
PPRO’s compliance with the Electronic Money Regulations 2011. This was because
such fees are only chargeable under terms in contracts which have a specified end
date. The FCA was concerned that the duration of the contract was not clear, as
noted above, and that therefore PPRO did not have the right to charge the fee.

PPRO has agreed to clarify the duration of the contract in its terms and conditions,
as set out above.

The dormancy fee

PPRO charge 9.95 euros per month, if there is no load or spend transaction for a 12
month period.

The FCA was concerned that the dormancy fee was not sufficiently transparent to
consumers, in that it was not clear in what circumstances it would apply and when.

PPRO will clarify the language in relation to the dormancy fee in its terms and
conditions and also make specific reference to it in the fee summary section of the
VIABUY website.

It will also send consumers an email, should their accounts be inactive for 11
months, to remind them that they will start to incur a monthly charge should they
not use their account.

The auto-renewal term

Paragraph C (‘Term’) of Appendix 1 to the 2016 contract states: ‘If the Agreement
is not terminated according to the Terms and Conditions before the end of this
period, the Agreement will be automatically renewed for 3 years’.

Term 8.3 of the 2016 contract states: ‘Unless We or You terminate the Agreement
prior to the end of the Term, these Terms and Conditions will automatically renew
and be applicable for the duration of the renewed Term’.

The FCA was concerned that there was a lack of clarity in the contract as to how the
term relating to automatic renewal of the contract was meant to operate,
particularly in light of the unclear duration of the contract. The FCA considered that
the combined effect of the duration and auto-renewal wording was that there was a
risk either that consumers might not appreciate that their contract would be
automatically renewed or that they might not understand for what duration the
contract had been renewed for.

In addition to the clarifications on duration of the contract outlined above, PPRO has
agreed to improve the language of the term relating to automatic renewal of the
contract, such that it is clearer that the contract should be terminated by
consumers if they do not wish the contract to continue after the first three years.

The jurisdiction clause

Term 17.1 states as follows: ‘The Agreement will be governed by English law,
subject to the cases where according to the relevant European Union legislation a
given issue is governed by the laws of another country. You agree to submit to the
exclusive jurisdiction of the courts of England to resolve any legal matter arising
from the Agreement, subject to the cases where according to the relevant European
Union legislation a given matter can be resolved by the courts of another country.

The FCA considered that PPRO’s jurisdiction clause was invalid. In our view the
natural reading of the term left consumers under the impression they were obliged
to take legal action in England & Wales. This is contrary to the Brussels I
regulation2, under which consumers are free to bring proceedings for any matter
under a consumer contract either in the UK or their home member state. Further,
proceedings in relation to consumer contracts may only be brought against
consumers in their home member state. PPRO has agreed to amend the term so

2 Regulation 1215/2012

that it makes clear that consumers are free to take action against PPRO in the
jurisdiction in which they are domiciled.

Legal Information

As a regulator, we, the Financial Conduct Authority (FCA), can challenge firms using
terms that we view as not being fair and/or transparent within the meaning of Part
2 of the Consumer Rights Act 2015 (CRA) under Part 2 of the CRA. We review
contact terms that we come across in our supervision of firms, which includes terms
referred to us by consumers, other enforcement bodies and consumer
organisations. We may seek an injunction under paragraph 1 of Schedule 3 CRA to
prevent the use of an unfair term, or accept an undertaking in lieu, which is what
we have done in this case.

We have a duty under the CRA to notify the Competition and Markets Authority
(CMA) of the undertakings we receive. The CMA has a duty to publish details of
these undertakings, which it posts on www.gov.uk. We also publish the
undertakings on our website. When publishing the undertaking we name the firm
and identify the section(s) of the CRA to which the undertaking relates.

Even if firms have not given an undertaking or been subject to a court decision
under the CRA, 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
enforcement bodies to similar terms or terms with a similar effect.

Ultimately only a court can determine the fairness or transparency of a term under
the CRA, and therefore, we do not recommend terms that have been revised by a
firm as being 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 to us, we consider the term to be improved enough
that further regulatory action is not required.

Other information

PPRO cooperated fully with the FCA in resolving our concerns.

Timing: Consumers will be moved onto new terms as of 1 December 2017,
following the 2 months’ statutory notice required by the Payment Services
Regulations 2009, to be given on 30 September.

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