On 11 July 2007, the Spanish Parliament approved Law 22/2007, on distance marketing of consumer financial services, to enter into force within 3 months. This law imposes obligations on providers of financial services by post, telephone or the internet to provide certain mandatory information prior to the entering into of any agreement, a ‘cooling-off’ period for consumers and guarantees against fraud.
This new law implements Directive 2002/65/CE of the European Parliament and of the Council of 23 September 2002, concerning the distance marketing of consumer financial services. Part of this Directive had already been incorporated into the Spanish legal system through Law 34/2003 of 4 November, for the amendment and adaptation of the Spanish regulations on private insurance to European rules. The Directive also has to be applied in conformity with Directive 2000/31/CE, the EU Electronic Commerce Directive. These Directives were a response to the legal uncertainty brought about by the massive expansion of telecommunications networks and the internet, and the current law deals specifically with the consumer financial services sector.
The core aim of the new Spanish regulation is to provide the necessary and appropriate protection to consumers involved in a financial contract concluded at a distance, taking into account the distinctive characteristics of financial services. In this regard, the more relevant aspects introduced by this law are as follows:
i. A severe system concerning the mandatory information the providers of services must offer consumers prior to the execution of the distance contract is established. This information includes details concerning the provider itself, the financial service, the distant contract and the means of complaint and compensation, so that the parties are fully aware of their respective rights and obligations and the agreement is reached with full awareness of the situation. It is important to highlight that such information must be provided beforehand and prior to the assumption of any obligation by the consumer.
ii. The right of withdrawal, by which the client is able to withdraw from the signed contract, without penalty and without giving any reason, within a specified time period of fourteen (14) days starting from the next day after the execution. This term will be extended to thirty (30) days in those cases related to life insurances, starting from the day the provider communicates to the consumer that the contract has been executed. The law contains some exceptions as to the right of withdrawal, (1) when it is necessary to provide legal certainty to some financial contracts (for example mortgage agreements), or (2) when the fluctuation of certain conditions entails the contract to be complied with from its beginning.
iii. The additional guarantees provided to the consumers concerning the fraudulent use of their payment cards in connection with distance contracts, establishing the possibility of immediate cancellation of the transaction. This law also states as an additional guarantee that the consumer will not be obliged to pay any sum to the provider where the consumer receives unsolicited services (in this respect, the law expressly states that consent of the consumer does not exist in case of lack of answer to a proposal or communication of the provider).
iv. Finally, the law also ensures the necessary judicial measures for the consumers´ defence, promotes out-of-court redress when solicited by the consumer, and establishes a well-balanced sanction system.
All of the measures above are designed to eliminate the legal uncertainties originated by this developing system of marketing financial services through the establishment of a clear and modern legal framework that assures security and protection to the consumers.