Enhancing Consumer Rights: EU Directive 2023/2673 on Distance Financial Services Contracts adopted on 22 November 2023 

During late November 2023, the European Union has enacted Directive (EU) 2023/2673 (Directive) which amends Directive 2011/83/EU on consumer rights by introducing within the scope of this last directive special provisions applicable to financial services contracts concluded at a distance and at the same it repeals Directive 2002/65/EC which is specifically regulating distance marketing of consumer financial services (previously implemented into Romanian law, pursuant to Government Emergency Ordinance No 84/2004 on the protection of consumers upon conclusion and performance of consumer financial contracts).

The Directive was adopted on 22 November 2023 and it will enter into force on 18 December 2023. Member States are obligated to implement the Directive by 19 December 2025. The transposition legislation shall apply starting from 19 June 2026.

The Directive aims to harmonize and enhance consumer protection across the internal market by addressing challenges posed by digitalization, ensuring transparency, by introducing comprehensive pre-contractual information, clearer withdrawal procedures and safeguards against deceptive online practices and fostering informed decision-making in financial transactions. Those changes mainly cover the following aspects:

• Right of Withdrawal from Distance Contracts via Online Interface: For distance contracts completed through an online interface, the trader must facilitate consumer withdrawal through a prominently displayed and easily accessible withdrawal function. The function, labelled “withdraw from contract here”, should be continuously available throughout the withdrawal period. After the consumer completes the online withdrawal statement, the trader must promptly acknowledge its receipt.

• Information Requirements: Traders must provide clear and comprehensible information to consumers before binding them to a distance contract. The information covers the trader's identity, main business, contact details, financial service details, total price, consequences of late payments, and other essential elements.

• Right of Withdrawal from Financial Service Contracts: Consumers have a 14 to 30 calendar days withdrawal period, starting from the contract's conclusion or the receipt of relevant information. The right of withdrawal is not applicable to certain financial services, such as those dependent on market fluctuations, travel insurance of less than one month, and fully performed contracts at the consumer's request. The consumer is deemed to have exercised the right of withdrawal by communicating it within the stipulated period.

• Payment for Service Provided before Withdrawal: Consumers must pay only for services provided before withdrawal, without penalties. Traders must promptly return any sums received in addition to those corresponding to the services actually obtained.

• Adequate Explanations: Traders must offer free, clear, and comprehensive explanations to consumers about proposed financial service contracts. These explanations must be offered free of costs for the consumer, must be presented by the trader before contract conclusion and cover key elements, including (1) required pre-contractual information, (2) essential characteristics of the proposed contract as well as ancillary services, and (3) the potential effects on the consumer, including consequences of payment default or late payment. Member States have the flexibility to determine the manner and extent of providing these explanations, tailored to the specific circumstances of the financial service transaction. In situations involving online tools, consumers possess the right to request and receive human intervention both before contract conclusion and, when justified, after the contract is concluded.

• Additional Protection for Online Interfaces: Member States ensure that traders do not deceive or manipulate consumers through online interfaces during financial service contract conclusions. To address these concerns, practices such as emphasizing specific choices, repeatedly prompting already-made decisions through disruptive pop-ups, or complicating the termination process compared to subscription are prohibited. Member States have the option to enforce more stringent provisions concerning these trader requirements, provided such provisions align with Union law.

• Interaction of the Directive with other EU consumer protection regulations governing specific financial services:

1. To avoid duplications or overlaps, where other EU acts govern specific financial services which contain rules on pre-contractual information, on the right of withdrawal or on adequate explanations only the respective provisions of those other EU acts should apply to those specific consumer financial services (and not those in the Directive), unless otherwise provided in those acts, including the explicit option for Member States to exclude the application of those specific rules.
2. Where there are EU acts governing specific financial services which provide for rules on pre-contractual information but do not establish rules on the right of withdrawal, the provisions on the right of withdrawal under the Directive should apply. In other words, in that case, rules on pre-contractual information laid down in the Union act governing specific financial services and the rules on the right of withdrawal as laid down in the Directive should apply.