Proposal for review of the Distance Marketing of Financial Services Directive: EBF key priorities

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The European Banking Federation welcomes the European Commission’s proposal for a new Directive on Distance Marketing of Financial Services (DMFSD).

We consider the DMFSD being overall short, simple, agile as well as having a technology-neutral approach. These features allow it to be effective to compensate, in particular, for shortcomings in directives which do not cover certain aspects of consumer protection. At EBF level, the key priorities in light of the proposal focus on the following points :

• Withdrawal button: the withdrawal button should remain at the initiative of the trader, without being mandatory for the consumer. It entails high and disproportionate IT costs for all providers, triggering structural and operational changes. On top of the withdrawal button itself, providers will have to be able to manage the various other withdrawal channels (since the button would be one among several possibilities). Moreover, we are skeptical as to the fact that customers may engage and disengage too easily, which would subsequently disrupt the smooth processing of genuine engagements. It would also lead to additional administrative burden as well as IT developments, the cost of which will be borne eventually by consumers. Besides, the rationale as laid down in the EC proposal is not to make the withdrawal more burdensome than the procedure for concluding the contract. This can be materialized by stipulating that the trader is obliged to provide for on-line adequate and comprehensive information aimed at ensuring an easy and conscious withdrawal from the contract.

• Pre-contractual and contractual information should be provided in a timely manner and in good time, as to preserve the fluidity of the customer journey and not to make the procedures more cumbersome without benefit to the consumer is of utmost importance. Also, the one-day requirement will lead to obstacles for consumers seeking banking services, while it could be an impediment for those consumers who feel sufficiently informed and, as such, they are willing or need to conclude the contract without unnecessary delay.

• Precedence and prevalence of sector-specific legislation: Where a sectoral directive already exists and contains provisions of the pre-contractual information and right of withdrawal [e.g. the Credit Consumer Directive (CCD); Mortgage Credit Directive (MCD) or Payment Services Directive (PSD)], these provisions enshrined should apply and prevail over the DMFSD. The latter should serve its purpose as “safety net” for consumers when specific legislation does not exist.

• Distance contract by telephone: In cases of a financial contract at distance, the supplier shall fulfil his obligation to provide information to consumer immediately after the conclusion of the contract, if the latter has been concluded at the consumer’s request using a means of distance communication. With the aim of upholding technological neutrality, in the event that new distance marketing techniques rendered available in the future, which do not allow for the transmission of pre-contractual information before the conclusion of the contract, EBF aims to highlight that for any other means of distance communication, the contract which does not allow for the transmission of the contractual terms and conditions as well as the information, the trader shall fulfil his obligation to provide information immediately after the conclusion of the distance contract.”

For more information:

Vassileia Tsirigkaki, Policy Adviser – Prudential Policy & Supervision, v.tsirigkaki@ebf.eu

About the EBF:

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.