EU regulations on distance selling of financial services agreed
EU members hope that new regulations which will apply to the distance selling of financial services will increase consumer confidence in e-commerce. The European Union has moved a step closer towards creating a regulatory framework that will build consumer confidence in e-commerce, both inside individual states and across borders. The Internal Market, Tourism and Consumer Affairs Council has recently reached a political agreement on common rules for selling financial services (for example, credit cards, investment funds and pension plans etc) by telephone, fax or on the internet.
EU regulations that applied to the distance selling of other products and services came into force in 2000. But, because financial services were considered to need a separate set of rules, they were excluded at the time.
Main features· Inertia selling (in which customers are persuaded to buy a service that they have not solicited, or are sent a financial product that they have not ordered but have been charged for) is prohibited.· Rules will be introduced to restrict practices like cold calling, cold faxing and spamming. Member states are given two options that they can apply with respect to cold calling, cold faxing or spamming: either an opt-in arrangement or an opt-out .· Sellers must provide customers with comprehensive information before a contract is concluded. This will have to include the identity and contact details etc. of the supplier, the price and payment arrangements, contractual rights and obligations, and information about the performance of the service offered. · Except where there is risk of speculation, customers must be able to withdraw from the contract during an obligatory cooling off period, which will be 14 days after signing up, or 30 days in the case of pension plans or life insurance.
Encourage e-commerce The regulations have been drawn up with a view to encouraging the development of consumer confidence in e-commerce and consumer protection.Because they are intangible, financial services are well-suited to distance marketing, especially e-commerce. Draft contracts can be exchanged by e-mail, the final contract can be signed by e-signature and even the payments made electronically.
Once the proposed Directive has been through its second reading in the European Parliament, it will be adopted.
For more details, see the European Commission's website: http://europa.eu.int
