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The aim of this communication is to clarify the interaction between the e-commerce directive and existing financial services legislation in order to facilitate the freedom to provide services while strengthening consumer confidence
Commission Communication of 7 February 2001 to the Council and the European Parliament on e-commerce and financial services [COM(2001) 66 - Not published in the Official Journal].
The e-commerce Directive is a horizontal framework directive that applies to all information society services ("on-line" services) and therefore also to financial services provided on-line. Financial services provided off-line will be subject to a different legal regime. The communication explains that the e-commerce Directive complements sector-specific financial services legislation (information requirements for customers in the field of consumer credit, insurance and distance marketing). For example, the "internal market clause" applies to financial services by enabling providers to supply services throughout the Union on the basis of the legislation prevailing in the Member State in which they are established (i.e. country of origin). The e-commerce Directive also complements the electronic signatures Directive in that it obliges Member States to ensure that their legal system allows contracts to be concluded by electronic means. Financial service providers are unable to comply with fifteen different sets of rules and regulations if they really wish to offer cross-border on-line services. It is also necessary to reassure consumers who are still reluctant to use this type of service. In order to attain this objective, cooperation between the Member States must also be strengthened.
The "internal market clause" of the e-commerce Directive does not apply to the taking up and carrying out of insurance business, the advertising of UCITS and the issue of electronic money by institutions which do not benefit from a European passport. There is also a derogation for contractual obligations in consumer contracts. The Directive also preserves the freedom of the parties to choose the law applicable to their contract.
The Directive should be transposed by 17 January 2002. This will require further harmonisation of conduct-of-business rules for investment services and pre-contractual information requirements covered by the proposed Directive on the distance marketing of financial services.
The communication defines three policy areas:
- Ensuring coherence in the legislative framework for financial services by, for example, harmonising core marketing and information rules and by regulating sectoral issues (banking, insurance, investment, etc.) and product-specific issues (mortgage credit, consumer credit, investment services, UCITS, life and non-life insurance, insurance intermediation, etc.): The Commission will also undertake a review of national rules relating to retail financial service contracts to ensure closer convergence and will inform the Member States on the conditions in which the case-by-case derogation provided for in Article 3(4) may be applied, enabling the Member States to apply on certain conditions, their national provisions to services coming from other Member States, with a view to defending public order or protecting consumers.
- Building consumer confidence in redress and Internet payment systems: For cross-border redress, the Commission supports the establishment of private Alternative Dispute Resolution (ADR) and has launched FIN-NET (FINancial Services complaints Network) for financial services. For secure Internet payment systems, the Commission intends to develop the e-Europe initiative aimed at improving security by new identification and authentication techniques and to encourage the establishment of a legislative framework providing reassurance that a refund will be made if problems occur (non-authorised transaction, non-delivery or fraud).
- Enhanced supervisory cooperation between Member States based on the principle of supervision by the authority of the country of establishment of the financial service provider: In the field of money laundering, digital signatures and the other identification and authentication techniques will partly reduce the risks associated with on-line and cross-border transfers. It will also be necessary to examine new risk profiles in financial services such as credit, market, interest-rate and insurance risks, which are being examined as part of a current review of prudential requirements (own funds) and solvency margins (insurance).