ERU, Alm.del - 2018-19 (2. samling) - Bilag 28: Kopi til orientering af regeringens høringssvar til Europa-Kommissionens offentlige høring over evaluering af direktiv nr. 2002/65/EF om fjernsalg af finansielle tjenesteydelser, fra erhvervsministeren

Erhvervsudvalget 2018-19 (2. samling)
ERU Alm.del Bilag 28
Offentligt

NOTAT

16. juli 2019

19/03829-28

son-dep

NOTAT

Response by the Danish government to the public consultation for the

Evaluation of the Distance Marketing of Financial Services Directive

2002/65/EC

General remarks

The Danish government welcomes the evaluation of Directive concerning

the distance marketing of consumer financial services (DMFSD). In gen-

eral, Denmark supports the Better Regulation and REFIT agenda. It is im-

portant to have an ongoing focus on ensuring effective consumer protection

as well as reaping the potential benefits of the common regulation in EU.

The Danish government welcomes a thorough evaluation of DMFSD. This

will support the Commission’s intentions towards Better Regulation as de-

scribed in the Principles on Better Regulation.

The following remarks encompass the Danish position on the questions

asked in the public consultation of DMFSD.



Interaction with other legislation

Since the introduction of DMFSD in 2002, several pieces of product-spe-

cific EU legislation in the areas of consumer credit, mortgages, payment

accounts, payment services, insurance products and investment products

have been adopted.

Streamlining and simplification may lead to an increased applicability for

consumers as well as a reduction of administrative burdens for traders. In

this regard, the Danish government encourages the Commission to examine

the possible need to streamline the information requirements across the

consumer protection legislation, especially in the case of reproduced regu-

lation in the Consumer Credit Directive (CCD) and the Mortgage Credit

Directive (MCD), where it may see fit.

Furthermore, the Danish government finds it relevant to consider whether

specific products still require targeted regulation. The original purpose of

the DMFSD was to allow the selling of financial services on digital or tel-

evised platforms, thus allowing distance selling and marketing. Today, this

is the mainstream way of marketing, and the question is whether there is

ERU, Alm.del - 2018-19 (2. samling) - Bilag 28: Kopi til orientering af regeringens høringssvar til Europa-Kommissionens offentlige høring over evaluering af direktiv nr. 2002/65/EF om fjernsalg af finansielle tjenesteydelser, fra erhvervsministeren

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still a need

for a distinct directive targeting the “regulatory net difference”

between the regulation of the sector-specific directives and the DMFSD.

The main requirements are quite similar across DMFSD, CCD and MCD.

Therefore, the immediate Danish assessment is that

in substance

the regu-

lation in the DMFSD should maintain but continued in the specific direc-

tives applying to different sectors/products. This might ensure greater co-

herence in the regulation.



Active consumers strengthen competition

The development in behavioural insights has demonstrated that the exten-

sive amount of information provided to the consumer might be counterpro-

ductive. Many studies confirm that the amount of information can over-

whelm and frustrate consumers, causing them to skip reading the infor-

mation provided and to choose the “status quo”. This is in contrast to the

intentions behind the pre-contractual information requirements. Modern

consumer legislation should pay attention to the development of behav-

ioural insights, e.g. by giving consumers the essential information pre-

sented in a simple, clear and accessible manner. Furthermore, the infor-

mation must be presented at the right time for each purchasing step the

consumer goes through.

The Danish government acknowledges and welcomes the Commission’s

behavioural study on the digitalisation of the marketing and distance selling

of retail financial services published in April 2019 in connection with the

launch of the public consultation of the evaluation of DMFSD.



Digitalisation

Since the introduction of DMFSD in 2002, the retail financial sector has

gone increasingly digital

–

within and across borders. The environment in

which consumers act has changed because of digitalisation and new tech-

nologies. New business models challenge the traditional concept of traders

and consumers.

DMFSD is based on previous generations of technology and this can cause

friction for both traders and consumers. Technology is playing an increas-

ingly important role in the interaction between traders and consumers, and

consumers often search for financial services online. It is thus important

that DMFSD reflects this technological development and supports new dig-

ital solutions that empower the consumers to compare financial services

and prices from different traders.

Moreover, the access to big data and the ability to apply big data when

profiling consumers have changed and improved the methods used by the

traders to assess their customers. However, the need to know the customer

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remains. Future regulation must ensure that the application of new technol-

ogies and the use of data is regulated appropriately and balanced for the

benefit of consumers.



Information requirements

Traders are obliged to comply with a large number of information require-

ments in product-specific regulation of advertisements, in the pre-contrac-

tual stage, and in the agreement. This can be burdensome to both the traders

and the consumers, who are expected to read and understand extensive in-

formation in a purchase situation. The Danish government thus finds that

there is a need to evaluate all information requirements in DMFSD in order

to ensure that consumers are provided with essential and beneficial infor-

mation, presented in a simple manner and at the right time in the purchase

situation.

Specific remarks

Pre-contractual information requirements in Article 3

Article 3 lists the information, which shall be provided to the consumer

prior to the conclusion of the distance contract. Behavioural insights have

demonstrated that the extensive amount of information provided to the con-

sumer might be counterproductive. Many studies show consequently that

the information overwhelms and frustrates consumers, causing them

simply to skip reading the information. This is contrary to the intensions of

the pre-contractual information requirements.

The Danish government finds that it is necessary to consider how to regu-

late how the traders present the information to the consumers in the pre-

contractual phase. In other words, the regulation should ensure that only

the most important and beneficial information is presented to the consumer

up front, and presented in a simple and legible manner. Furthermore, the

information must be presented at the right time during the process of pur-

chasing, making it useful for the consumer to compare the financial service

across traders and make the right choice. This would reduce the risk of

consumers paying more or taking unnecessary risks regarding financial ser-

vices.

The Danish government welcomes the work carried out by the Commission

on identifying the commercial practices consumers face at the advertising

and pre-contractual stages when searching for and buying retail financial

services online, as well as assessing the impacts of these practices and cor-

responding remedies.

However in this regard, the Danish government urges the Commission to

consider a reduction of the amount of information provided up front in the

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pre-contractual stage in order to limit information overload that consumers

may experience. This to make sure that the most important and useful in-

formation is provided at the right time to the consumer and thereby secure

effectiveness of the information requirements.

In 2017, the Danish Competition and Consumer Authority performed a la-

boratory-based experiment that successfully enabled consumers to take no-

tice of terms and conditions (T&Cs) in an online shopping environment and

use these more actively in choosing between products. The analysis demon-

strated that if T&Cs are re-configured into icons, placed at the product se-

lection site and consisting of the key information that consumers normally

would look for in T&Cs, then the information is easier for the consumer to

use in understanding and comparing products. This may also lead to

stronger competition among traders to provide better T&Cs to the benefit

of consumers.

The Danish experiment was based on the information requirements in Ar-

ticle 6 in the Consumer Rights Directive. Nevertheless, the considerable

potential for simplification can be used as inspiration in the evaluation of

DMFSD. An article about the study is available at

the Danish Competition

and Consumer Authority website.

Recommendations put forward in the ‘Behavioural study on the digitalisa-

tion of marketing and distance selling of retail financial services’

The Danish government acknowledges the need for rigorous enforcement

in marketing and distance selling of retail financial services. Furthermore,

the Danish government acknowledges the need for special attention to vul-

nerable consumers and the use of bundling in marketing of financial ser-

vices.

The ability of comparing financial services is essential for an active de-

mand side, which in turn will increase competition in the markets.

The Danish government welcomes the recommendation to clarify that in-

formation provision should be adapted

to the user’s device. The Danish

government also welcomes the focus on ‘time for decision-making’, as

some consumers are vulnerable to the psychological phenomena ‘fear of

missing out’ in a digital context.

In general, the Danish government acknowledges that there is a need to

improve the quality of information provided to consumers in the pre-con-

tractual phase when they buy financial products and services online, taking

the lessons of the present study into account. In this regard, the Danish

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government urges the Commission to consider how to regulate the presen-

tation of information as well as how to reduce the amount of information

presented up front to the consumer in order to limit the information over-

load that consumers can experience.

With regard to the recommendation on increasing transparency around per-

sonalisation and targeting of advertisement, the Danish government urges

the Commission to tackle this in a larger context. The use of data to per-

sonalise and target advertisement across markets is important for policy-

makers when the market can consist of vulnerable consumers specifically

for that product or service.

The Danish government acknowledges the tremendous work carried out by

the Commission on this topic and will be at its disposal for further feedback

if required.