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Distance contracts for financial services

12.12.2004

Recent changes to the Law of Obligations Act define distance contracts for the provision of financial services and deal with the consumer's right to receive information and to withdraw from the contract. The amendments implement the EU Directive on Distance Marketing of Consumer Financial Services.

On November 11 2004 amendments to the Law of Obligations Act entered into force, implementing the requirements of the EU Directive on Distance Marketing of Consumer Financial Services (2002/65/EC).

As other EU directives having similar subject matter have been implemented within the norms set out in the Law of Obligations Act, the legislature followed the same approach in this instance. The act regulates distance contracts for the delivery of goods or provision of services, and the directive specifies the requirements for entering into distance contracts regarding the provision of financial services. Therefore, the legislature has implemented the directive by amending and supplementing the existing distance contract provisions in the act.

The amendments define distance contracts for the provision of financial services and deal mainly with the consumer's right to receive information and to withdraw from the contract. The data that must be given to a consumer is specified in the act. However, some requirements that are generally applicable to distance contracts do not apply to those dealing with the provision of financial services. For example, the requirement that a consumer receive the confirmation of disclosed information in writing or through another durable data medium accessible by the consumer is not applicable when the distance contract is for the provision of financial services. The same is true of the requirement that the supplier must execute a consumer's order within 30 days of receipt of that order.

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