The EU Council of Ministers has adopted without debate the
Directive on the distance marketing to consumers of financial
services. The Directive sets out the rules on sales of services
such as credit cards, mortgages and pensions over the web or by
telephone or fax.
A Directive on distance selling was passed in 1997 and
implemented in UK law in 2000. However, it excluded financial
services because it was felt that consumers needed greater
protection than the Directive provided for distance sales of other
goods.
The new Directive will come into force upon its publication in
the Official Journal of the European Communities which is expected
in a few weeks. Member States are required to implement its
provisions within two years of publication.
The main features of the new law are as follows:
- A prohibition on abusive marketing practices;
- A restriction on cold calling and unsolicited commercial
e-mail;
- An obligation to provide certain prior information before
concluding a contract;
- A period during which consumers can withdraw from a contract
without incurring penalties and without giving reasons – known as a
“cooling off” period. This period will be 14 calendar days or, in
the case of life insurance and individual pensions, 30 days. There
is no cooling off period for services such as share purchases where
the price depends on fluctuations in the financial market.
