Although the field of provision of financial services at a distance has made significant progress, the rules of the provision of online financial services in the European Union (EU) are established in Directive 2002/65/EC of the European Parliament and the Council of 23 September 2002 concerning the distance marketing of financial services (“Directive)”, which was adopted 17 (!) years ago. The provisions of the Directive were transposed into the Law on Consumer Right Protection. It is obvious that Directive 2002 is not suitable for regulating provision of financial services via the Internet or mobile phone and it is incompatible with Fintech models applied in financial markets.
While the EU was discussing the need and content of amendments to the Directive, in October 2019, the European Banking Authority (EBA) announced its opinion regarding the submission of information to consumers, who intend to use financial services at a distance.
1. Content of pre-contractual information. When pre-contractual information is provided via means of distant communication, the provider of financial services must assure that the information submitted to the consumer is enough for the consumer to assess whether the financial service meets the consumer’s needs. This means that:
- The key information about the planned contract (for example, applicable fees) must be highlighted in the text;
- The provider of financial services cannot put a tick in advance in order to indicate that the consumer does understand and agree with the terms and conditions specified in the pre-contractual information;
- The provider of financial services cannot put a tick in advance in order to indicate that the consumer does agree with provision of additional services.
2. Format of pre-contractual information. Pre-contractual information must be submitted in a coherent, accurate, clear and comprehensive manner. In its opinion, the EBA briefly clarifies the content of these requirements, yet it should be noted that the consumer must be provided with a possibility to increase the font size of the information submitted on the screen.
3. Testing. The provider of financial services, while drafting the package of pre-contractual information for consumers, must perform tests with a segment of the target customers, i.e. whether the information is comprehensive for consumers.
4. Monitoring. The provider of financial services should analyse customers’ behaviour and perform the monitoring of pre-contractual information efficiency (for example, by conducting consumer surveys analysing consumers’ claims), and, if necessary, to revise the content of the pre-contractual information.
5. The right of the consumer to waive the contract. It should not be more complicated for the consumer to waive the contract concluded with the provider of financial services than to conclude a contract. This means that if the contract on the provision of financial services was concluded with the customer at a distance, the customer should not be required to waive the contract only by submitting a written notification via registered mail.
This EBA opinion is a concentrated guide for providers of financial services on the ways of assurance of consumer protections until the Directive is amended. The document is available here.