The dematerialisation of banking and financial services has profoundly transformed consumer habits. Opening an account, subscribing to a savings product or taking out a loan can now be done in just a few clicks, without ever meeting an adviser in person. However, this ease of access is accompanied by a protective legal framework designed to rebalance the relationship between the professional and the consumer. The distance marketing of these services is governed by specific rules, in addition to the more general legislation on canvassing. Understanding this specific regime is essential for any individual wishing to navigate these offers in complete safety. This article follows on from our complete guide to banking and financial canvassingby focusing on the particularities of distance selling.
Scope of remote regulation
For a contract to be subject to these special rules, a number of conditions must be met. These relate to the nature of the contract, the status of the parties and the manner in which the agreement is concluded. The aim of the law is to cover situations where the consumer is potentially more vulnerable, due to the absence of direct contact with the professional.
Contracts covered (remote financial services)
The regulations cover the provision of financial services under an organised distance selling or service-provision scheme. The scope is deliberately broad to encompass a wide range of transactions. It covers all banking, credit, insurance, investment and payment services. In practical terms, this includes products as varied as :
- Traditional banking transactions, such as opening a deposit account or taking out a bank card.
- Consumer credit contracts or revolving credit.
- Investment services, such as portfolio management or opening a securities account.
- Transactions in financial instruments (shares, bonds, etc.).
- Taking out insurance products, when offered by a financial institution.
- Payment services and electronic money transactions.
This broad definition makes it possible to adapt protection to constant changes in the financial sector and the emergence of new online products and services.
Contractors involved (supplier and consumer)
The legislation applies to relations between a professional, acting in the course of his or her trade or profession, and a consumer. The notion of consumer is central here: according to the Consumer Code, it is any natural person who acts for purposes that do not fall within the scope of his or her commercial, industrial, craft, liberal or agricultural activity. In other words, this protection is reserved for private individuals. A craftsman who takes out credit for his business needs will not benefit from this specific regime, but other protections may exist. The supplier may be a credit institution, an insurance company, an investment firm or any other professional authorised to offer financial services.
Remote communications
The fundamental characteristic of distance selling is the absence of the simultaneous physical presence of the supplier and the consumer. The contract is formed exclusively through the use of one or more remote communication techniques. The law does not set out a restrictive list, allowing current and future technologies to be included. The most common means are :
- Internet (websites, online forms, secure customer areas).
- Electronic mail (email).
- The telephone (outgoing or incoming calls).
- Mobile applications.
- Postal mail.
It is important to note that the process must be entirely at a distance. If a consumer starts a process online but goes to a branch to sign the contract, the distance marketing regulations will generally not apply, as the contract was not concluded at a distance.
Information requirements for distance selling
One of the pillars of consumer protection is the obligation on professionals to provide pre-contractual information. Before consumers are bound by a contract, the supplier must provide them with a set of clear and comprehensible information. This requirement is reinforced in the context of distance selling, where the consumer cannot ask questions directly to a physical contact.
General information to be sent
Professionals must first give precise details of their identity and contact details. This includes their company name, geographical address, telephone number and registration number in a professional register (such as the Trade and Companies Register). It must also mention the identity and contact details of the supervisory authority to which it reports (for example, the ACPR in France). Next, the essential features of the financial service offered must be described in detail. This includes the nature of the product, its duration, its functionalities and the associated risks. Finally, information on price is fundamental. The supplier must indicate the total cost of the service, including all fees, taxes and commissions. If an exact price cannot be set, the supplier must provide a clear basis for calculation, enabling the consumer to check the final amount.
Information specific to distance contracts (right of withdrawal, duration, termination, language)
In addition to general information, the regulations require the provision of information specific to the conclusion of distance contracts. The most important information concerns the right of withdrawal. The trader must inform the consumer of the existence of this right, the period within which it must be exercised (generally 14 days, sometimes 30 for certain life insurance contracts) and the procedures for exercising it. If, by way of exception, the right of withdrawal does not exist, this must be expressly stated. Other information is required, such as the minimum term of the contract, the conditions for renewal and termination, the law applicable to the contract and the language in which communications will be made. All this information must be provided on a durable medium (PDF file, email, etc.) before the contract is signed.
Special case of cold calling
Telephone canvassing is particularly tightly controlled to avoid aggressive practices. Since the law of 24 July 2020, it has been forbidden to canvass consumers for the sale of certain high-risk financial products. For other services, professionals must identify themselves at the start of the conversation, indicate the commercial nature of the call and respect specific time slots. What's more, the consumer's mere oral acceptance over the telephone is no longer sufficient to form a contract. The "oral consent" rule is no longer applicable. The professional must send a written offer to the consumer, who is not bound until he has signed and returned it. This measure, known as the written signature, is designed to ensure that the consumer's consent is considered and not obtained under pressure.
The right of withdrawal in distance selling
The right of withdrawal is without doubt the most emblematic guarantee of consumer protection in distance selling. This is a "post-contractual" cooling-off period that allows consumers to withdraw from a contract without having to justify their decision or pay any penalties.
How to exercise the right of withdrawal (time limit, refund)
Consumers have 14 calendar days in which to exercise their right of withdrawal. This period begins on the day on which the distance contract is concluded. To exercise this right, the consumer must notify the trader of his decision, for example by using a standard form that must be provided by the trader, or by any other unambiguous statement. It is sufficient to send the notification before the deadline expires. Once withdrawal has been notified, the trader is obliged to reimburse all sums paid by the consumer as quickly as possible, and within 30 days at the latest. If performance of the contract has begun at the express request of the consumer before the end of the withdrawal period, the trader may demand payment for the service actually provided. However, he may only do so if he has previously informed the consumer of this possibility.
Exceptions to the right of withdrawal (financial instruments, mortgages, fully performed contracts)
The right of withdrawal is not absolute, and the law provides for several notable exceptions. The most important of these concerns financial services where the price depends on fluctuations in the financial market beyond the control of the professional. This applies mainly to financial instruments such as shares, bonds or units in collective investment undertakings (UCIs). Allowing consumers to withdraw from a contract would be tantamount to giving them the opportunity to speculate without risk. Similarly, home loan contracts are not subject to this right of withdrawal, but benefit from a different protection regime, with a mandatory 10-day cooling-off period before accepting the loan offer. Finally, the right of withdrawal is logically excluded for contracts that have been fully performed by both parties at the express request of the consumer before the latter exercises his right.
Relationship with consumer law (earmarked loans)
Regulations on distance selling of financial services are interwoven with the general principles of consumer law. A perfect example is that of assigned credit, i.e. credit taken out to finance a specific purchase or service. If the consumer exercises his right of withdrawal for the main good or service, the linked credit agreement is automatically terminated, without charge or penalty. This interdependence of contracts is a fundamental protection that prevents consumers from finding themselves having to repay a loan for a good that they have ultimately refused. This logic strengthens consumer protection against clauses that could create an "unfair advantage". significant imbalance between the rights and obligations of the parties. It applies consistently with regulation of credit sales and consumer rights in a broader sense.
The legal framework surrounding distance financial marketing is complex, but its purpose is to ensure that consumers give their free and informed consent. When faced with contracts that are often technical and binding, it is vital to know your rights so that you can assert them. If you feel that your rights have not been respected, or if you have any questions about a financial services contract, the assistance of a professional can help you feel secure. For legal advice on distance selling, contact our firm of lawyers specialising in banking and financial law.
Sources
- Consumer Code
- Monetary and Financial Code
- Order no. 2005-648 of 6 June 2005 on distance marketing of consumer financial services
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