Topic 13: Online Financial Services
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This topic introduces the student to the rules applicable to financial services provided through electronic means.
Topic Content
Financial Services
What are financial services?
Under the EU Directive, 2002/65 on the Distance Marketing of Consumer Financial Services, financial services are defined as,
‘any service of a banking, credit, insurance, personal pension, investment or payment nature.’
Financial Services are intangible in nature and thus eminently suitable for sale over the internet or any other distance communication system. However, the potential for abuse is wide since the product or service will normally not be a one-off transaction. In the case of a CD/DVD or book, the consumer can easily return the goods and demand a refund. In the case of life assurance for 10 years, it will be very difficult to untangle the contractual situation established. Also, the nature of financial services is such that the need for accurate, reliable product information is a sine qua non of the contract. The potential for mis-selling is ever present. Thus, it was decided that the E-Commerce Directive would not apply to financial services and that financial services required separate英语论文网 【http://www.51lunwen.org】 regulation. The Distance Marketing Directive was published on the 23rd September 2002 and required the member States to enact domestic laws in accordance with the Directive by 9th October 2004.
The main aim of the Directive is to harmonise the law of financial services applicable to distance contracts and thus further the Internal Market in such services and products.
The Directive is also designed to protect consumer rights and to create a level playing field for suppliers of financial services to market their services in other member states. The Directive is also designed to be consonant with the approach of the E-commerce directive. The directive was also promulgated to fill the gap left by the failure to extend the protections of the Distance Selling Directive to consumers of financial services.
Substantive Scope of the Directive
The Directive only protects individual consumers. If individuals are contracting for financial services in their business or professional capacity then they are excluded from the protections of the Directive.
The Directive only applies to distance contracts. Examples of the types of distance contracts contemplated by the Directive include;
Telephone
Internet
E-mail
Postal contracts (mail order)
Interactive Television
Mobile phone
The key test is that the contract is concluded entirely ‘without the simultaneous physical presence of the supplier
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