Advisers selling investment products over the phone, internet or post will have to provide greater levels of pre-disclosure under a new European directive aimed at guarding consumer rights when buying financial products remotely.
The FSA is setting out its rules for implementing the distance marketing directive, due to be enacted on October 9. FSA spokeswoman Jackie Blyth says the rules are designed to bring alignment across the EU.
She says the purpose of the DMD is to “help the smooth operation of the market for financial services throughout the European Economic Area”. It sets minimum standards for information required to be provided to consumers before they enter into a financial services contract with a supplier by “distance means”.
It provides a period of 30 days for life policies and 14 days for everything else, during which consumers can cancel contracts without penalty.
LIA head of public affairs John Ellis believes the directive will not affect IFAs substantially. He says for the face-to-face advice market, it will only affect advisers whose business is substantially over the phone or the internet.
Blyth says: “For many IFAs, these rules will only mean technical changes but it is important not to underplay the impact of this. IFAs will need to know which areas of their business will be affected.”