Challenges of the Knowledge Society (Jun 2023)
THE CHALLENGES OF PROTECTING CONSUMER IN THE DISTANCE MARKETING OF FINANCIAL SERVICES DIRECTIVE
Abstract
The European Commission’s new rules presented in its Digital Finance Package at September 24, 2020, introduce much-needed improvements for the online retail financial services market which will strengthen consumer protection. However, additional new rules are needed in some key areas. On May 11, 2022, the EU Commission published a directive proposal amending Directive 2011/83/EU on consumer rights (the „Consumer Rights Directive″ – CRD) and repealing Directive 2002/65/EC concerning the distance marketing of consumer financial services. The European Commission’s legislative proposals are a very welcome step in the right direction to better protect consumers in the increasingly digital financial services market. While digitalisation brings opportunities for suppliers and consumers alike, it also brings a number of risks, making a proper regulation of the market necessary not only by updating it but strengthening consumers ’rights, by filling existing regulatory gaps in the online financial services market. Financial services are very different from other consumer goods and services covered by the CRD and therefore creating a specific chapter and rules for financial services is crucial. At the European level, there are numerous regulations across this area. The regulatory failure results first and foremost from the lack of adequate consumer protection standards and enforcement failings at Member State level. While the Commission's proposal brings key improvements, some much-needed measures are missing and their absence represents real challenges for effective consumer protection. This paper aims to show what are the aspects that need to be improved in the Commission's proposal and how to proceed in order to create a high level of protection and a fair financial services market, and each matter will be illustrated with examples from various Member States, including Romania how the gaps in current legislative framework have detrimental effects for consumers.
