A Directive on distance selling was passed in 1997 and implemented in UK law in 2000. However, it excluded financial services because it was felt that consumers needed greater protection than the Directive provided for distance sales of other goods.
The new Directive will come into force upon its publication in the Official Journal of the European Communities which is expected in a few weeks. Member States are required to implement its provisions within two years of publication.
The main features of the new law are as follows:
- A prohibition on abusive marketing practices;
- A restriction on cold calling and unsolicited commercial e-mail;
- An obligation to provide certain prior information before concluding a contract;
- A period during which consumers can withdraw from a contract without incurring penalties and without giving reasons – known as a “cooling off” period. This period will be 14 calendar days or, in the case of life insurance and individual pensions, 30 days. There is no cooling off period for services such as share purchases where the price depends on fluctuations in the financial market.