Financial services contracts concluded at a distance | New directive enters into force

Introduction

The use of digital tools by consumers has been increasing at a rapid pace in recent years, including for the conclusion of financial services. It is in this context that the European Commission has taken action to increase consumer protection by updating the EU’s legislative arsenal, which until recently consisted mainly of Directive 2011/83/EU as regards financial services contracts (the “2011 Directive”) and Directive 2002/65/EC concerning the distance marketing of consumer financial services (the “2002 Directive”). This initiative of the European Commission culminated in the adoption of Directive (EU) 2023/2673 of 22 November 2023 (the “New Directive”) amending the 2011 Directive and repealing the 2002 Directive. The Directive entered into force on 18 December 2023.

Repeal of the 2002 Directive

The progressive introduction in recent years of EU sector-specific legislation has resulted in significant overlaps of that legislation with the 2002 Directive. Furthermore, significant developments in digitalisation have led to significant changes to the financial services market which were simply not envisaged that the time of drafting of the 2002 Directive. These factors cumulatively exacerbated the need to repeal the 2002 Directive (with effect from 19 June 2026).

Amendment of the 2011 Directive with the introduction of new Chapter III bis

The New Directive has introduced a new Chapter III bis (Rules on distance contracts for financial services) to the 2011 Directive thereby extending the scope of that directive to cover financial services (which were previously excluded from scope). Certain contained within the 2002 Directive which were deemed to be still relevant and necessary have been incorporated into this new Chapter III bis of the 2011 Directive.

Some of the key provisions introduced pursuant to the New Directive include the following (some of which have been carried over from the 2002 Directive):

• Dark patterns forbidden: practices that materially distort or impair the ability of consumers to make autonomous and informed choices or decisions will be forbidden.
• Pre-contractual information: consumers’ rights to pre-contractual information including adequate explanations on proposed contracts, have been enhanced.
• Right to human intervention: consumers shall have the right to request and to obtain human intervention at the pre-contractual stage, and if justifiable, after the a distance contract has been concluded.
• A withdrawal button: while the 2002 Directive already included rights of withdrawal, a specific withdrawal function/button shall in the future be prominently displayed on the online interface and easily accessible.

Interaction with other laws

These rules will apply to all financial services except where such services are covered by specific sectoral legislation. Where this is an EU legislative act governing specific financial services, barring some exceptions, the provisions of that specific act should be applied.

Transposition into national law

Member States have until 19 June 2025 to transpose the Directive into national law and until 19 June 2026 to apply it. In transposing the New Directive, Member States shall not maintain or introduce, in their national law, provisions diverging from those laid down in the New Directive, resulting in a different level of consumer protection throughout the EU, unless otherwise provided for in the New Directive.