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European Commission consults on Distance Selling Directive

07 November 2006

Directive 1997/7/EC of the European Parliament and of the Council of 20 May 1997 on the Protection of Consumers in respect of Distance Contracts (Distance Selling Directive) aims at ensuring that consumers, who buy goods or services via distance selling means (and, thus, without any face-to-face contact with the supplier), are in no worse a position than consumers purchasing with face-to-face contact.

The Distance Selling Directive covers both goods and services. However, Article 3 limits the application of the Distance Selling Directive by excluding certain types of contracts from all or some of the Distance Selling Directive’s provisions.

Financial services, due to their complexity and their value, are amongst these exemptions and have been covered in the Distance Marketing of Financial Services Directive 2002/65/EC4 (“Financial Services Distance Marketing Directive”).  It is proposed that this directive will undergo a review in the near future.  The European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004 and 2005 implement the Financial Services Distance Marketing Directive in Ireland.

All twenty five Member States have transposed the Distance Selling Directive into national law.  The European Communities (Protection of Consumers in Respect of Contracts Made by Means of Distance Communication) Regulations 2001 and 2005 implement the Distance Selling Directive in Ireland. 

In accordance with Article 15(4) of the Distance Selling Directive, the European Commission has issued a report (“Report”) to the Council, the European Parliament and the European Economic and Social Committee on the implementation of the Distance Selling Directive.

Consultation

The Commission wishes to collect the Member States’ and stakeholders’ views on the application of the Distance Selling Directive and its suitability for new market conditions and/or products.  Accordingly, following from the Report, the European Commission has launched a consultation on the Distance Selling Directive through the publication of a questionnaire on the implementation of the Distance Selling Directive which interested parties are invited to respond to. 

The Distance Selling Directive contains various regulatory options which were open to the Member States in implementing the Distance Selling Directive.  Further, Article 14 (known as the minimal clause) allowed Member States to introduce or maintain more stringent provisions to ensure higher levels of consumer protection.  This has created variation between the national laws implementing the Distance Selling Directive.  The Commission proposes to look at whether the national divergences in transposition of the Distance Selling Directive emanating from these freedoms have had an impact on the Internal Market and affected business and consumer confidence in cross border trade.  In addition, issues have been raised in relation to the Distance Selling Directive's practical application in view of new technologies.

The consultation addresses, among other things:

• possible failings in relation to consumer protection, particularly in view of new technologies and market practices;
• whether the current exemptions from protection under the Distance Selling Directive need to be revised;
• whether the cooling off period, which allows consumers to cancel their purchase within a period of time after the sale, should be harmonised across Member States; and
• whether the minimal clause, which allows Member States to impose a higher standard of consumer protection, has affected cross-border trade and competition.

On the basis of the outcome of the consultation launched by the questionnaire and of the results of the review, the Commission will consider the need for further legislative initiatives in the field of distance selling in accordance with the better regulation objectives pursued by the Commission in terms of simplification of the regulatory environment.

All interested parties who wish to respond to the questionnaire should submit replies to the European Commission by 21 November 2006.

If you would like Mason Hayes & Curran to formulate a submission in relation to the consultation process, please contact;