On 11th May 2022, the EU Commission published a directive proposal (the “Proposal“)1amending Directive 2011/83 / EU on consumer rights (the “Consumer Rights Directive“) and repealing Directive 2002/65 / EC concerning the distance marketing of consumer financial services (the”DMFSD“; the Consumer Rights Directive and the DMFSD, jointly, the”Directives“).
Once entered into force, the Proposal (rectiusthe then new directive) will repeal the DMFSD and introduce new chapter IIIaentitled “rules concerning financial services contracts concluded at a distance“, to the Consumer Rights Directive, for the purpose of harmonizing the field through one and the same piece of legislation.
In 2020, the EU Commission, in a staff working document2, pointed out that the DMFSD had only been partially effective and had contributed in a limited way to the consolidation of the EU single market, due to internal and external barriers. According to the Commission, the ongoing digitization process had exacerbated some aspects of the distance marketing of consumer financial services, not fully addressed by the DMFSD. In addition, the introduction of EU product-specific legislation3 had led to significant overlaps, thereby creating both legal and practical difficulties in the application of the DMFSD, which hence appears outdated and no longer relevant in the context of the recently-enacted EU legislation governing the field.
In the light of the foregoing, on 28th May 2021, the Commission started a revision process of Directives in order to enhance consumer protection, as well as to make consumers’ rights fit for the digital age, while trying to guarantee a “safety net” for future emerging products.
The Proposal’s overall goal is to promote the provision of financial services in the EU single market, while ensuring the highest consumer protection possible.
Based on the current version of the Proposal, such goal is going to be accomplished in the following ways:
- a full harmonization of EU law provisions having as objective financial services, so that providers and consumers are granted the same rights in all EU Member States;
- The pre-contractual information to be provided to consumers must be clear and comprehensible, so as to ensure full transparency and awareness thereof. In particular, the trader4 must supply the following information: (i) full identity, (ii) geographical address of the place of business, (iii) a description of the main characteristics of the financial service in question, (iv) total price thereof (including fees, charges and expenses), (v) possible risks related to the operations or whose price depends on fluctuations in the financial markets, (vi) payment and performance arrangements, (vii) practical instructions for exercising the right of withdrawal;
- The latter may be exercised by the consumer, without penalty and without giving any reason, within fourteen calendar days running either from the conclusion of the distance contract or the day on which the consumer in question receives the contract’s terms and conditions, as well as its key information. In case of contracts concluded by electronic means, the Proposal envisages a strengthened right of withdrawal, whereby the consumer is provided with a button on the online interface, available throughout the withdrawal period. In addition, the trader must always allow for the exercise of the right of withdrawal if pre-contractual information has been received by the consumer less than a day before the conclusion of the contract;
- Financial contracts negotiated at a distance by electronic means that provide for automated advisory services (the so-called “robo-advisory”) and customer help services (the so-called “chat boxes”) must provide the consumer with a right to request and obtain human intervention. In addition, the trader is prohibited from using its online interfaces to distort or impair consumers’ ability to make a free, autonomous and informed decision or choice;
- extension to financial services contracts concluded at a distance of the rules on enforcement and sanctions currently provided by the Consumer Rights Directive.
In the EU single market, a high level of protection in distance marketing of financial services is key in order to protect consumers’ freedom and equality of choice. This being possible solely through a full harmonization of EU law governing the field.
Over the past 20 years, the distance marketing of consumer financial services has been rapidly changing, given that new players, new business models and new distribution channels have emerged. Consumers are increasingly inclined to use digital tools. The Covid-19 pandemic and the related restrictions have accelerated such process, making a review of relevant EU law necessary.
1. Directive Proposal amending Directive 2011/83 / EU concerning financial services contracts concluded at a distance and repealing Directive 2002/65 / EC of 11th May 2022 (COM (2022) 204 final). At present, the legislative process is at the so-called “commenting stage”, which is ending on 8thJuly 2022. The comments will be processed and summarized by the Commission, and then presented to Parliament and the Council in order to feed into the consequent legislative debate.
2. European Commission, Staff Working Document Evaluation of Directive 2002/65 / EC concerning the distance marketing of consumer financial services (SWD (2020) 261 final), published on 5thNovember 2020 (https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2020)261⟨=en).
3. Namely, Directive 2008/48 / EC of 23rd April 2008 on credit agreements for consumers, Directive 2014/17 / EU of 4th February 2014 on credit agreements for consumers relating to residential immovable property, Directive 2014/92 / EU of 23rd July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features, and Regulation 2016/679 / EU of 27th April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.
4. Pursuant to Art. 2, paragraph 1, sub-paragraph 2), of the Consumer Rights Directive, “trader“(in the Italian version,”professionista“) means”any natural person or any legal person, irrespective of whether privately or publicly owned, who is acting, including through any other person acting in his name or on his behalf, for purposes relating to his trade, business, craft or profession in relation to contracts covered by this Directive“.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.