On 12 May 2010, the new Commercial Practices Act ("CPA") entered into force, repealing the former Fair Trade Practices Act of 14 July 1991 ("FTPA"). One of the major changes introduced by the CPA is the repeal of the general ban on tied offers. This has been widely publicised. However, insofar as financial services are concerned, the ban has been maintained.
The FTPA's general prohibition on tied offers was found to be too restrictive and hence inconsistent with Community law, in particular Directive 2005/29/EC concerning unfair business-to-consumer commercial practices.
The Directive, however, allows the Member States to enact or maintain more stringent provisions in order to protect the economic interests of consumers in certain fields, including financial services. Indeed, given the complexity and risks inherent in the financial services sector, the Belgian legislature decided to lay down stricter rules for the provision of financial services and hence maintained the general ban on tied offers in this field.
Definition of financial services
What exactly is meant by the term "financial services"?
The CPA merely indicates that "financial services" include banking services, the extension of credit, insurance, individual pension schemes, investments and payments.
Although such a broad definition may be difficult to implement in practice (where to draw the line), it has some advantages as well. In fact, the legislature deliberately chose not to list all services to which the ban applies. Its main concern was to ensure that all financial services which could be offered to consumers would be covered and hence to avoid loopholes in the law.
Guidelines as to which financial services fall under the scope of the ban on tied offers can be found both at the European level and in national legislation. For example, various Community directives on investment services, the business of credit institutions and direct insurance contain relevant definitions. Reference can also be made to the legislative history to the Directive on the distance marketing of consumer financial services, which includes an indicative list of financial services covered by the Directive, and the Markets in Financial Instruments Directive ("MiFID") and its implementing Royal Decree of 3 June 2007, which contains a clear definition of certain services related to financial instruments.
Exceptions to the ban
There are several exceptions to the general ban on tied offers in relation to financial services, the most important of which is the offering, for a single price, of two different financial services considered to form a whole. This exception has already given rise to ample case law, particularly in relation to consumer credit and insurance services.
The CPA expressly states that the executive branch can draw up a list of financial services considered to form a whole. Although this possibility also existed under the FTPA, it was never used. However, certain services were explicitly excluded from this category and hence could not be offered together. Unfortunately, these "exceptions to the exception" are not found in a single place; rather they are set forth in various legislation, including the Act of 4 August 1992 on mortgage loans, which prohibits lenders from directly or indirectly pressuring consumers to take out an insurance policy with an insurer designated by the lender, although the lender may still offer a lower interest rate if the consumer decides to contract with its preferred insurer, provided certain conditions are met, in particular as regards the possibility to terminate the insurance contract independently of the credit agreement.
Likewise, the Consumer Credit Act of 12 June 1991 prohibits lenders from pressuring consumers to enter into any contract other than an insurance policy for the loan.
With respect to insurance, one of the most common permissible practices is the joint offer of car breakdown cover and travel insurance.
It is also important to keep in mind the rules on tied offers in the scope of so-called "combined" insurance policies, such as an all-risks automobile insurance policy or a global homeowner's insurance policy, whereby the insurer undertakes to cover several risks. Whether a combined insurance policy or the offering of an insurance policy with a financial service complies with the rules on tied offers will largely depend on whether it is common practice for the services in question to be offered together. In this respect, at least one court has already held that the offer of an all-risks insurance policy with the purchase of a car does not constitute a whole within the meaning of the abovementioned exception and is therefore unlawful.
When considering a tied offer in relation to financial services, it is important to bear in mind the expansive definition of the term financial services and the fact that the applicable legal provisions are not found in a single place.
Even if a particular offer is in theory admissible under the CPA, it may still be considered unlawful under other legislation. Reference should thus be made to specific, potentially applicable legislation, not all of which is mentioned herein, before turning to the CPA.