The European Commission has finally reached agreement over its controversial proposals to regulate the sale of financial services by mail, telephone and the Internet.
A Directive regulating the distance selling of all other goods and services was adopted in 1997 and entered into force last year. Financial services were excluded from its scope since they were considered to require a separate set of rules.
The new rules prohibit practices such as inertia selling and cold faxing, to promote sales of credit cards, investment funds, pensions and other financial services. Options for consumers to opt-in or opt-out of financial telephone and e-mail marketing campaigns are covered in the Directive.
Banks will also be obliged to provide consumers with a comprehensive package of information before an eventual contract is concluded. Consumers will have the right to cancel a contract within 14 days of signing up, extended in the case of life insurance and pension plans to 30 days.
This right will not apply to financial services that may be subject to price speculation, such as sales of foreign currency and securities. Member states may also exclude mortgage or property credit from this right of withdrawal from a contract.
In addition, in the event of fraudulent use of payment cards or other non-cash payments, consumers will be able to cancel transactions and be entitled to reimbursement of any sums charged.
European Commissioners David Byrne comments: "This is a major breakthrough that will provide consumers with much needed protection and rights. Distance marketing is currently dominated by classical techniques such as mail and telephone. But the Directive is also a key step in creating a regulatory framework to build consumer confidence in e-commerce, inside a consumer’s member state or across borders."
Financial services groups currently operating across border are concerned that the specification of a two-year timeframe for individual countries to adopt the regulations will lead to uncertainty as members states ratify the Directive at different times.