9.1 Definition and Scope

This short directive regulates the marketing of financial services via means of distance communication—ie in particular via telephone and the Internet—to consumers (Art 1). Hereby consumers are defined in the usual manner as natural persons who are acting for purposes which are outside their trade, business or profession. Financial services are defined as any service of a banking, credit, insurance, personal pension, investment or payment nature (Art 2).

9.2 Information Requirements

The key requirement of this directive is that prior to concluding a financial services contract the consumer must be provided with a specific set of information concerning the supplier of the service, the service provided, the contract itself, and possibilities of redress if need be (Arts 3, 4). If the contract is agreed to via telephone a much‐reduced set of information is sufficient, provided the required information is supplied at a later stage (Art 3.3). The information must be provided on paper or another durable medium (Art 5). In the case of repeated interactions, the information only has to be provided either before an initial framework agreement is executed, or—if no such framework agreement exists—before the first agreement is executed, and thereafter at least once per year (Art 1).

9.3 Withdrawal and Renewal

In most cases, consumers must have an unconditional right of withdrawal free of charge from financial services contracts concluded by means of distance communication for a period for 14 calendar days, and 30 days for certain life insurance and pension products. There are some important exceptions, in particular with respect to the sale or purchase of financial instruments and foreign exchange transactions and short‐term contracts, and possibly property‐related transactions depending on Member State discretion. If another distance contract is attached to a cancelled financial services contract, then this contract will be cancelled free of charge as well (Art 6). When services are cancelled the payment required under the contract can be at most proportional to the services provided and there can be no penalty element (Art 7).

In the case of a distance contract where a fraudulent card payment is made, there must be a means of cancelling that payment and having the money returned (Art 8).

Whilst tacit renewal of contracts might be allowed depending on the Member State in question, chargeable financial services are subject to certain restrictions, and absence of a reply cannot be interpreted as consent (Art 9).

9.4 Other

Unsolicited communications by automated calling systems without human intervention and via fax are only allowed after prior consent. Depending on the Member State, unsolicited communications by other means either require prior consent, or at least no prior objection. They must not entail costs for consumers (Art 10).

The exact nature of the sanctions for non‐compliance is left with the Member States. Usually they include that the consumer may cancel the contract at any time, free of charge and without penalty (Art 11). Consumers cannot waive their rights (Art 12), and there should be an out‐of‐court redress procedure (Art 14). In many Member States the burden of proof that information requirements have been complied with falls on the supplier, and contractual terms that would shift this burden back to the consumer are considered unfair terms under the Consumer Contracts Directive 1993/13 (Art 15).