In the November 2001 IT Bulletin we discussed the early draft of this Directive and the first stages of its passage through the EU legislative process. The new Directive has now finally been passed by the EU and entered into force on 9 October 2002. Member States will now have until 9 October 2004 to pass domestic legislation implementing the Directive.
The new Directive should not be confused with the Distance Selling of Consumer Goods Directive that was passed in 1997 and entered into force in 2000. That Directive is similar in some respects but it does not cover financial services since they were considered to require a separate set of rules. The new Distance Selling of Financial Services Directive fills that gap. Both Directives only protect natural persons in their capacity as consumers and do not protect individuals if they are acting in a professional capacity.
The new Directive regulates the marketing of financial services by means of distance communication. "Financial service" means any service of a banking, credit, insurance, personal pension, investment or payment nature. "Means of distance communication" is defined as any method of communication where the parties are not simultaneously present e.g. telephone, fax, traditional mail, proprietary computer networks and the internet. There are five key features of this new Directive:
A prohibition of "inertia selling"
Inertia selling is the marketing practice of supplying financial services to a consumer without a prior request on his/her part and including a request for immediate or deferred payment. Under the Directive a failure of a consumer to respond after receiving such unsolicited financial services cannot be taken to be consent.
Regulation of direct marketing (including cold calling and spamming)
It is an opt-in system (prior consent of the recipient is required) in relation to sending unsolicited faxes or using automated calling systems for direct marketing of financial services. Member States have been given the option to choose between opt-out (prior consent of the recipient is not required) and opt-in in relation to all other forms of direct marketing e.g. email and mobile phone text messaging. However to be consistent with the new Privacy and Electronic Communications Directive, direct marketing of financial services by email, fax, mobile phone text messaging and non-automated telephone calls will need to be opt-in unless it is an email or text message to an existing...