Not upheld: unilateral variation of account terms; unfair contract terms; alleged misrepresentation complaint against Santander UK Plc

Decision detail

Summary

H, a limited company, complained that Santander unfairly changed its business account terms by introducing a £9.99 monthly fee after marketing the account as offering free banking forever in 2009. Mr V, as director, argued the promise should be binding, the variation clause was unfair, and Santander had misled him. Santander maintained that while the account was marketed as free banking forever, the contractual terms and conditions always contained variation clauses allowing changes with notice, and it provided over 60 days' notice before implementing the change in October 2025. The ombudsman found that the variation clauses were clear, legitimate, and not unfair, that Santander was contractually entitled to make the change, and that it acted fairly in consolidating its business account range and treating all customers consistently. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Santander marketed the account as offering free banking forever, the contractual terms and conditions from inception contained clear variation clauses allowing changes with notice. These clauses were not unfair or unusual as variation clauses are common in long-duration financial services contracts and serve a legitimate purpose. Santander provided the required notice and was entitled to make commercial decisions about product viability. Even if the marketing promise had formed part of the contract, the variation clause would have allowed Santander to change it. The ombudsman rejected arguments about misleading conduct (as H received what was promised for 16 years), estoppel (as H suffered no detriment from taking the account), and unfair contract terms (as the variation clause created no significant imbalance). The ombudsman noted that free business banking is not a typical offering from major retail banks and that Santander's consolidation was intended to treat all customers fairly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website