You know what it’s like – you’ve been getting calls from an unknown number all day, and when you finally pick up the tenth time around, you hear a call centre operator’s sweet voice.
They say they’re calling about the most profitable investment, favourable pension products, or maybe a provider change that is “guaranteed to save you money”. The next thing you know… Did I really agree to something? What exactly? And do I even want it?
Too bad, current legislation often offers no way back. That is what the new EU directive on distance marketing is supposed to tackle, amongst other things.
Concluding contracts online or over the phone, without personal contact between the buyer and the seller, has become much more common in recent years, partly due to the COVID-19 pandemic. I don’t just mean fraudulent “too good to be true” offers that I mentioned in the first paragraph, but entirely ordinary insurance or investment contracts.
That is why the European Parliament is currently working on ensuring the highest degree of consumer protection in such cases. We also want to unify the rules for offering similar financial and other services within the EU’s Single Market.
What is the scope of the new directive? Its aim is to assist consumers when they are at a disadvantage to the seller – for example when they are caught by surprise at home or in the street. The European Parliament will primarily focus on all financial services, such as banking, credit, insurance, pension, investment, or payment services ordered at a distance (without the trader and the consumer meeting face to face).
Clear terms, more transparency and no-nonsense withdrawal
One of the most essential points of the directive is stipulating which conditions the consumer must receive before concluding the distance contract (pre-contractual information). The trader will be obliged to send this information to the consumer in good time and, most importantly, clearly and understandably, either in electronic or printed form. This will prevent all kinds of common loopholes and hidden conditions distance traders have used.
The directive also states that the right of withdrawal is a fundamental right for each consumer. It is hard to understand how some financial products and services work, even when you are a professional, let alone a layperson. Due to that, the right of withdrawal is fundamental in this field.
For example, if you conclude a financial contract at a distance on the Internet, the provider will now have an obligation to provide a “withdrawal button” with an explanation. This will make it much easier for consumers to cancel an unfavourable contract or withdraw from a purchase in the trial period.
Last but not least, an important change relates to the structure and appearance of the online environment where customers buy their products, which will have to communicate the conditions of the provided services much more clearly and simply. Therefore, online platforms will no longer be allowed to only link to their terms and conditions in a tiny font in the bottom corner of their sites. The new directive should also put an end to the ubiquitous trend of “special offers” with conditions that are completely unclear to the customer, which is a good thing. Our goal is quite simple: Reduce all unfair practices that make consumers less able to make free, independent, and informed decisions. After all, if there is one thing our citizens deserve in this accelerated, overwhelmed world, it is open and clear communication.