Unit B2 – Consumer contract and marketing law THE UNFAIR COMMERCIAL PRACTICES DIRECTIVE IN FINANCIAL SERVICES Ankara, 7 December 2009 Karine Maillard Unit B2 Consumer Contract and Marketing Law

Unit B2 – Consumer contract and marketing law Contents Financial services are covered by the UCPD Minimum harmonisation in respect of financial services Relationship with lex specialis Conclusions

Unit B2 – Consumer contract and marketing law Financial services are covered by the UCP Directive The UCPD covers all B2C commercial practices and all sectors of activity, unless expressly excluded Article 3(9) - Recital 10 Financial services: « any service of a banking, credit, insurance, personal pension, investment or payment nature » (Directive 2002/65/EC)

Unit B2 – Consumer contract and marketing law Basic principles Prohibition of unfair commercial practices, in particular misleading and aggressive practices Basic principles of protection: Accuracy of information on the main characteristics of the product and on fees/charges Completeness of material information Clarity, intelligibility and timeliness of information provided

Unit B2 – Consumer contract and marketing law Examples of cases from the Member States Examples of cases from the Member States: Misleading commercial practices in relation to investment products, i.e. Lehman Brothers bonds offered to ordinary consumers without informing them of the inherent risks Aggressive practices in order to create obstacles to switching a mortgage loan from one bank to another Aggressive practices in relation to raising bank fees by sending repeated notifications to consumers SMS small loans

Unit B2 – Consumer contract and marketing law Commission’s study and Working Document (Sept. 2009) Non transparent bank fees Insufficient and unintelligible pre- contractual information Obstacles to switching

Unit B2 – Consumer contract and marketing law Minimum harmonisation in respect of financial services Art 3(9) UCPD: « In relation to financial services… Member states may impose requirements which are more restrictive or prescriptive than this Directive in the field which it approximates ». Recital 9: “by reason of their complexity and inherent serious risks” Examples: o an outright ban on tied offers in the field of financial services o more prescriptive information requirements

Unit B2 – Consumer contract and marketing law Relationship with lex specialis I The general provisions of the UCPD complement sectoral Community legislation, which regulates specific aspects of unfair commercial practices, in particular: information requirements and rules on the way information is presented. In case of conflict between the general provisions of the UCPD and the more specific provisions of a lex specialis, the latter will prevail (Art 3(4)).

Unit B2 – Consumer contract and marketing law Relationship with lex specialis II Examples of specific provisions on information requirements : Directive 2002/65/EC (Distance Marketing of financial services), Art 3 Directive 2007/64/EC (Payment services), Art 36, 37, 41 and 42 Directive 2008/48/EC (Consumer Credit), Art 5-7,10-11, A. II and III UCPD complements these provisions and covers, for example: Misleading advertising of financial services Aggressive practices (e.g. obstacles to switching) The deceptive use of “free” or “without charge” False claims in relation to participation in codes of conduct

Unit B2 – Consumer contract and marketing law Conclusions The UCPD prohibits unfair B2C commercial practices in the financial sector To protect the economic interests of consumers, Member States can go beyond the provisions of the UCPD Specific provisions contained in other Community measures prevail, but the UCPD continues to apply for the rest

Unit B2 – Consumer contract and marketing law UCPD v lex specialis The example of Payment Services Directive UCPD’s general provisions complement the PSD, e.g.: Comparative advertising which creates confusion Using non-contractual barriers to dissuade consumers from terminating the contract PSD’s special provisions prevail in: Pre-contractual information on payment services offered to consumers Modalities of presenting this information