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Monday, 15th April 2024
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Amendments to
EU Distance
Selling Directive
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The European Commission has confirmed that it has accepted amendments proposed by the European Parliament to its proposed Distance Selling Directive for financial services. The proposal was originally put forward in October 1998. The Commission has presented an amended proposal for a Directive, which it says, is ‘aimed at establishing a clear regulatory framework for the marketing of financial services at a distance within the Single Market’.

Following the Parliament’s suggestion, a two week “warming up period” before the conclusion of a contract will be replaced with an obligation on the supplier to provide a comprehensive set of information elements.

The commission says the aim of the proposed Directive is to ensure a high level of protection for consumers of retail financial services (insurance, banking and investment services) marketed by mail, by telephone, by fax or by electronic means such as the internet.

The “maximum harmonisation” approach in the Directive is designed to ensure that suppliers of financial services would be able offer their products throughout the Single Market, without having to comply with different national consumer protection laws on distance sales.

The Commission has also accepted the Parliament’s suggested amendment which would transform the consumer’s limited right of withdrawal (in the case of unfair inducement or conclusion of the contract without access to the contractual terms and conditions), as had been provided for in the original proposal, into a general right, without penalty and without giving any reason. Member States would be free to set the “cooling-off” period between
14 and 30 days depending on the financial service offered.

However those Member States which opted for the maximum period would be obliged to accept the supply of financial services from other Member States with shorter withdrawal periods.
A certain number of financial services have been exempted from the withdrawal right (foreign exchange services, trade in securities, certain short term non-life insurance products, certain types of property loan) on the grounds that such a right would be incompatible with their correct functioning.

The Commission said that the current Finnish Presidency of the Council has expressed its intention to give priority to securing agreement on this proposal.

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