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[FYI] Amended proposal for a Directive on distance selliing


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Financial services: amended proposal for a Directive on distance

 DN: IP/99/559     Date: 1999-07-26

     TXT: FR EN DE
     PDF: FR EN DE
     Word Processed: FR EN DE


Brussels, 26 July 1999 

Financial services: amended proposal for a Directive on distance

The European Commission has presented an amended proposal for a
Directive aimed at establishing a clear regulatory framework for the
marketing of financial services at a distance within the Single
Market. The Commission has to a large extent followed the European
Parliament's suggestions for amendments, in particular by maintaining
a "maximum harmonisation" approach, by replacing a two week "warming
up period" before the conclusion of the contract with an obligation on
the supplier to provide a comprehensive set of information elements
and by introducing a general right of withdrawal. 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. It should encourage consumer
confidence in such services and provide financial service suppliers
with a clearly defined legal framework valid for distance selling
throughout the Single Market without hindrance. 

The proposal for a Directive, originally put forward in October 1998
(see IP/98/891) covers distance contracts concerning financial
services concluded under an organised distance sales or
services-provision scheme, for which the supplier and the consumer
make exclusive use of communication at a distance (such as by mail, by
telephone, by fax or by electronic means such as the Internet). 

The European Parliament's May 1999 Opinion supported the Commission's
"maximum harmonisation" approach, according to which the proposed
Directive would harmonise at a maximum level Member States' rules on
distance selling of financial services. As a consequence, suppliers of
financial services would be able offer their products throughout the
Single Market, without the hindrance of having to comply with
different national consumer protection laws on distance sales. 

The Commission has accepted the Parliament's suggested amendment
whereby, instead of granting consumers a right to a period of
reflection ("warming up") before agreeing to a contract, they would be
entitled to receive a comprehensive set of information prior to its
conclusion. This would allow consumers to compare various offers on a
more informed basis. 

Similarly, the Commission has incorporated 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
nonetheless 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

Other provisions contained in the original proposal, notably on
inertia selling and unsolicited communications, remain substantially

Adoption of the proposed Directive would mark an important step
towards improving the Single Market for Financial Services, and
complement other Commission initiatives to eliminate existing
obstacles within the framework of its Action Plan for Financial
Services (see IP/99/327). 

The Commission will submit the amended proposal to the EU's Council of
Ministers with a view to it rapidly agreeing a common position for
re-submission to the European Parliament. The Finnish Presidency of
the Council has expressed its intention to give priority to securing
agreement on this proposal. 

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