The purpose of regulating distance contracts is to protect consumers in the context of the growth of e-commerce, ensuring they have access to clear and complete information before making a purchasing decision and that they can benefit from a right of withdrawal without needing to provide justification for their decision. These measures are intended to encourage confidence in the use of digital media for shopping, contributing to the efficient and equitable functioning of the internal market.
In November 2023, the European Union adopted Directive (EU) 2023/2673, designed to modernise and harmonise regulations on distance financial services contracts. This Directive introduces essential amendments to Directive 2011/83/EU, extending its scope and strengthening consumer protection in the context of the accelerated digitalisation of financial services.
1. Brief introduction
Under Directive 2011/83/EU, distance contracts are defined as contracts for the supply of goods or services concluded between a trader and a consumer within an organised distance sales or service-provision scheme, without the simultaneous physical presence of the parties. This definition includes situations where the parties are physically separated at the time of contract conclusion and use one or more distance communication techniques, such as the internet, telephone or other electronic communication methods.
This Directive covers various aspects, including the pre-contractual information that traders must provide to consumers, the right of consumers to withdraw from contracts within a certain period (usually 14 days), and specific requirements relating to confirmation of information provided.
2. Objectives of Directive (EU) 2023/2673
The new Directive aims to adapt the existing legal framework to new technological and market realities, introducing specific regulations for distance financial services, which include banking services, credit, insurance, private pensions, investments and payments. In this context, four major areas of intervention have been identified:
2.1 Pre-contractual information
Professionals are required to provide detailed and accessible information at least one day before binding the consumer to a contract, ensuring they have sufficient time to assess and compare offers.
2.2 Right of withdrawal
The applicability of the right of withdrawal has been clarified and extended, introducing requirements for the withdrawal procedure to be as simple as the process of concluding the contract. Withdrawal facilities must be easily accessible and use clear wording, such as: "Withdraw from Contract here".
2.3 Adequate advice
Professionals must provide adequate and free explanations about the proposed financial services before contract conclusion, to help consumers understand whether the services are suitable for their needs and financial situation.
2.4 Human intervention
In the era of digitalisation, where automated tools such as robo-advisors or chatbots are becoming ubiquitous, consumers may request human intervention, ensuring they can receive personalised assistance both in the pre-contractual phase and during the performance or renewal of the contract.
2.5 Implementation and implications of Directive (EU) 2023/2673
Directive (EU) 2023/2673 establishes a clear framework for transparency and fairness in distance financial services contracts, reflecting the need for increased consumer protection in a constantly evolving digital environment. Member States are required to transpose these regulations into national legislation within two years (by 19 December 2025) and to apply them from 19 June 2026.
Final considerations
Directive (EU) 2023/2673 marks significant progress in adapting the legislative framework to the rapid dynamics of technology and the continuous evolution of interactions between consumers and professionals in the financial sector. This Directive aims to ensure a higher degree of security and transparency for consumers, while strengthening the efficient functioning of the internal market, thus consolidating consumer protection and developing a fairer and more accessible commercial environment, essential for building confidence and economic stability throughout the European area.
Reference: Directive (EU) 2023/2673 on EUR-Lex
