On 11 May 2022, the European Commission published a draft Directive that amends the current EU rules on Distance Marketing of Consumer Financial Services, which govern financial services sold at a distance.
The press release mentions that the draft Directive provides for:
- Easier access to a 14-day withdrawal right for distance contracts for financial services. Traders will have to provide a withdrawal button when selling through electronic means. The trader will also be obliged to send a notification of the right of withdrawal if the pre-contractual information is received less than a day before conclusion of the contract.
- A modernisation of the rules regarding what, how and when pre-contractual information is to be provided. For example, with regards to electronic communication, imposing obligations on the seller to provide certain information upfront, including for instance, the e-mail address of the trader, any potential hidden costs or the risk related to the financial service.
- New rules designed to protect consumers when concluding financial services contracts online. The draft Directive obliges traders to set up online systems which are fair and transparent and to provide an adequate explanation when using online tools (e.g. robo-advice or chat boxes). The rules also introduce the option to request human intervention, if the interaction with such online tools is not fully satisfactory.
- Stronger penalties to financial service contracts concluded at a distance in case of widespread cross-border infringements, with a maximum penalty of at least 4% of annual turnover.
- Full legal harmonisation, establishing similar rules for all providers across Member States.
The Commission’s Proposal will now be discussed by the Council and the European Parliament.
