Financial services providers operating within the EU may be forced to allow a 30-day cooling off per...
Financial services providers operating within the EU may be forced to allow a 30-day cooling off period for products sold over the internet.
EU member states are currently debating final rules over distance selling - the promotion of products overseas using telephony, fax or internet technology. Under right of withdrawal, clients would have the right to cancel a contract without reason in writing, including e-mail, within 30 days of purchase. Alan Davis, of solicitors Denton Wilde Sapte, told a recent London conference on the regulation of financial services on the internet, that agreement over whether the right of withdrawal period should be 14 or 30 days was one of the most controversial inclusions in the bill.
Implementation of the bill was due to begin in the autumn of this year pending EU member-states reaching agreement by June.
The E-commerce directive will enter into force in 18 months and must be implemented before the end of 2001, whereas the general distance selling directive must be implemented by the member states before 4 June.
Peter Marshall, communications manager at Royal & Sun Alliance said he could not see what benefit 30 days would give over 14.
He said: "It would mean the investments would have to be held in cash for the duration of the right of withdrawal period and if you had invested in tech at the end of 1999 and had your money held back, you would not have been too happy."
Marshall added that the 14-day "cool-off" period was generally accepted within the industry and would be a good benchmark for internet transactions as it would keep the uniformity of consumer-provider transactions.
Under a separate part of the legislation, financial services operating internet services within the EU are likely to be bound by a "country of origin" agreement by member states.
Providers offering products to EU consumers would be bound by the laws of their main country of operation, with states able to step in only on a case-by-case policy where public policy may be endangered.
Eric Ducoulombier, administrator in the communications unit of the European Commission's Directorate General for Internal Market and Financial Services, told the conference that 25% of goods sold online by US companies were to EU consumers, he noted the financial services industry was one of the main beneficiaries of the internet phenomenon. He said the move was part of a drive to foster the EU's two main objectives: to constitute a favourable legal framework for providers to operate in, and to build consumer confidence.
The EU is also trying to model its legislation on the single-market principle.
He said: "Companies will be more keen on conducting e-commerce within the EU when they know they are bound by one set of rules rather 15."