EU tightens online rules for finance

Companies selling financial services over the Internet face tighter restrictions since the European Union (EU) adopted...

Companies selling financial services over the Internet face tighter restrictions since the European Union (EU) adopted legislation on distance marketing.

The proposed directive, which was given final approval by ministers last week, lays down common rules for selling contracts for financial services and products via telephone, fax or the Internet.

It creates an obligation for companies to provide consumers with comprehensive information before a contract is concluded. It also gives the consumer the right to withdraw during a cooling-off period of between 14 and 30 days, depending on the product.

Unsolicited e-mail - spam - is prohibited, although countries can choose how to counter it: under one option spamming is prohibited unless the consumer has expressly consented, or opted in but governments can choose to prohibit it only if the consumer has signalled an objection, or opted out.

David Byrne, health and consumer protection commissioner, said the directive should boost consumer confidence in financial services and encourage the development of e-commerce. "It complements and underpins the E-Commerce Directive, making it easier for businesses to operate under legal certainty and for consumers to make transactions with confidence," he said.

The new legislation fills the gap in existing consumer protection legislation that resulted from the exclusion of financial services from a 1997 directive on distance selling.

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