Distance marketing rules come a bit closer

The Council reached a political agreement on common rules on selling contracts for credit cards, investment funds, pension plans, etc. to consumers by phone, fax or internet. Only Luxemburg objected to the Council common position.

The main features of the draft directive on the distance marketing of financial services are:

  • The prohibition of abusive marketing practices such as ‘inertia selling’;
  • Rules to restrict other practices such as unsolicited phone calls and e-mails (i.e. ‘cold calling’ and ‘spamming’);
  • An obligation to provide consumers with comprehensive information before a contract is concluded;
  • A consumer right to withdraw from the contract during a cool-off period – provided this does not open a risk of speculation.



According toHealth and Consumer Protection Commissioner David Byrnethis step is a major breakthrough that will provide consumers with much needed protection and rights. Distance marketing is currently dominated by classical techniques such as mail and telephone. Mr Byrne added the directive is also a key step in creating a regulatory framework to build consumer confidence in e-commerce, inside a consumer's Member State or across borders.

Internal Market Commissioner Frits Bolkesteinstated that the adoption of harmonised rules across the EU creates greater legal security and confidence and will therefore make it easier for both consumers and suppliers to cross national boundaries, especially for internet trade. He added this directive is an essential complement to the e-commerce directive adopted last year that will enter into force this coming January.

TheEuropean Banking Federation (EBF)stated that this draft directive raises "serious concerns" with respect to coherency. The EBF states it is not clear how this proposed Directive ties in with other initiatives which have recently been taken by the Commission in the area of e-commerce.

AmCham's EU Committeefears the proposed directive may bring about additional restrictions to the financial services industry through the imposition of new requirements on the distance selling of all types of financial services products sold in the EU.

Four Member States (France, Spain, Portugal, and Italy) originally blocked agreement as they sought to have country of origin jurisdiction on financial services and products originating from their own countries. They first also sought additional safeguards on incoming products.


On 19 November 1998 the Commission adopted a proposal for a directive concerning the distance marketing of consumer financial services. Negotiations on the draft directive have failed to produce much progress since April 1999. The Lisbon Summit called for an agreement by the end of 2000.

A directive regulating the distance selling of goods and services was adopted in 1997 and entered into force last year. Financial services were excluded from its scope since they were considered to require a separate set of rules. 'Distance marketing' means selling by telephone, fax, proprietary computer networks and the Internet.


  • The European Parliament will vote shortly on the proposal in its second reading;
  • The Council is to formally adopt its common position on the proposed directive after the EP vote in second reading.


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