‘Distance buyers’ grapple with patchwork of rules

Date: 24/06/1999

By Simon Coss

ANYONE who wants to use the telephone or Internet to shop around the EU for insurance, mortgages or other financial services currently faces a bewildering array of differing national laws on the subject.

Unfortunately for consumers, this is unlikely to change in the near future.

Acting Internal Market Commissioner Mario Monti and his consumer affairs counterpart Emma Bonino are trying to convince EU governments to harmonise their rules on the 'distance selling' of financial services.

The two Commissioners believe this is necessary for two main reasons. They say consumers should be able to benefit fully from the internal market in financial services and argue that the patchwork of rules currently in place across the Union gives some firms an unfair competitive advantage over others.

But the problem for Monti and Bonino is that very few people seem to agree with them.

One of the main sticking points as far as EU governments are concerned is the fact that Monti is calling for a complete harmonisation of the distance-selling rules.

A number of countries, led by France and Finland, have said they are not happy with this suggestion as they would like the right to impose stricter rules than those proposed by the European Commission.

At present, the draft legislation states that consumers should be allowed a 14-day 'reflection period' to withdraw from a contract. But in those countries opposed to the Commission plans, consumers often have the right to pull out of contracts without any conditions attached.

At a meeting of EU consumer ministers in April, member states stressed once again that any directive should only seek to harmonise rules to minimum levels, allowing countries which wanted to introduce tougher legislation to do so. They also voiced disquiet over the proposed 14-day reflection period.

Consumer rights organisations have also criticised the proposal, arguing like Paris and Helsinki that it would actually reduce consumer protection in many countries.

The Comité Européen des Assurances and the European Savings Bank Group, which represent many key players in the EU's banking and insurance industries, are equally sceptical, describing the plans as unworkable.

The Commission is also facing major problems in its efforts to try to introduce EU rules to make it easier for house-buyers to shop around for mortgages.

Two years ago, the institution invited representatives of consumer organisations and the financial services sector to draw up a voluntary code of conduct to ensure customers were given adequate information about the loans on offer.

But those talks collapsed at the start of this year when the participants admitted they could not see eye to eye. The main stumbling block came in the shape of EU consumers' organisation BEUC, which wants compulsory legislation to be introduced instead of a voluntary code.

Article forms part of a survey 'Financial Services'.

Keyword: Distance selling.