On 6 June 2023, the European Parliament and Council agreed upon the new directive concerning financial services contracts concluded at a distance (i.e. by phone or online), which amends the Distance Marketing of Financial Services Directive of 2002, strengthens consumer rights and creates a level playing field for financial services contracts concluded at a distance. However, as more consumers buy financial services online, such as credit, insurance, investments or pension plans, consumer protection rules need to be modernised.
The new regime also serves as a “safety net” for those financial services not subject to any specific legislation.
Main elements
The new regime mainly focuses on three points:
- Better consumer protection
Consumers must have sufficient time to read and understand pre-contractual information, compare offers and make an informed decision, while merchants will be obliged to provide information “in good time” and not at the same time as the conclusion of the distance contract. Furthermore, the new regime also provides for the possibility for consumers to receive adequate explanations from merchants (free of charge) and to request to talk to a real person when using fully automated online interfaces (such as chatbots) before concluding a contract.
2. Simplified rules to withdraw from all contracts concluded online
Any contract concluded at distance must ensure that consumers can withdraw the contract via a “withdrawal function”, which should be easily accessible, clearly visible and permanently available during the 14-day withdrawal period. The merchant must then send their confirmation of the withdrawal “without undue delay”.
3. To protect consumers from manipulative practices online
Providers of financial services will be prohibited from encouraging consumers to enter into contracts that go against their interests by, for example, making it more difficult to terminate a contract (than it was to sign up) or by repeatedly asking for a choice that has already been made in order to influence a consumer’s choice (e.g. by using pop-ups).
Entry into force
These rules now need to be formally adopted and then implemented by each member state.
Entry into force should be expected by 2025 or 2026.
