States to beef up distance selling rules

Date: 08/04/1999

By Renée Cordes

EU GOVERNMENTS are set to strengthen the European Commission's controversial proposals for rules to govern the sale of financial services via the telephone, direct mail or the Internet.

Consumer affairs ministers will argue that member states should be allowed to adopt tougher national laws to govern 'distance selling' than those agreed at Union level, when they discuss the issue at a meeting next Tuesday (13 April).

The Commission has argued against letting individual governments go beyond whatever regulations are agreed at EU level, insisting that its proposal strikes a balance between ensuring a single market in financial services and safeguarding consumers' rights.

Its approach is likely to be supported by the European Parliament's consumer committee when it votes on the issue later this month. "I am convinced we should make the regulation as simple as possible," said Dutch MEP Ria Oomen-Ruijten, the committee's rapporteur on the issue. "A European market is developing and consumers should be able to get the same products under the same conditions everywhere."

But a majority of countries, led by the Germans and the British, argue that under the Commission's proposals, borrowers' rights would be curtailed.

The Commission has proposed giving consumers 30 days to withdraw from mortgage, life insurance and pension contracts and just 14 days to withdraw from others.

However, in some member states, consumers currently have longer to change their minds and in many, they can do so without giving any reason.

The financial service industry argues that giving states the leeway to maintain stricter rules on distance selling would discriminate against companies which use the technique extensively.

See also report of Consumer Council, Luxembourg, 13.4.99 (Section 12.1).