Distance selling regulations for financial services

A proposed European directive regulating the distance marketing of consumer financial services came one step closer to fruition last week when political agreement was reached on common rules to be applied.  Distance marketing of other goods and services is already regulated under the Distance Selling Directive.

The proposed regulations cover “distance contracts” where the supplier makes exclusive use of “means of distance communication” (eg telephone, fax, email) up to the point where the contract is concluded.

Financial services covered by the regulations include banking, insurance, investment or payment services, for example mortgages and pensions.

Inertia selling of financial services will be prohibited, as will cold faxing.  Member states will be given two options for cold calling and spamming (unsolicited communication by telephone and e-mail): opt-in or opt-out.

Consumers will have to be given a comprehensive package of information before contracts are concluded and will have the right to cancel most contracts within a specified cooling off period of 14-30 days.   The cooling off provisions will not apply to financial services which may be subject to price speculation, such as sales of foreign currency and securities.  Mortgages may also be exempt from the cooling off period.

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