Transitional provisions
     29.  - (1) In relation to any contract made before 31st May 2005 which is a consumer credit agreement within the meaning of the 1974 Act and a regulated agreement within the meaning of that Act - 

    (2) In regulation 7 - 

    (3) In regulation 8(1), for "contractual terms and conditions and the information specified in" at each place where it occurs substitute "information specified in paragraph 13 of".

    (4) In regulation 10(3), omit - 

    (5) In regulation 11(3), omit "the contractual terms and conditions and" at each place where it occurs.


John Heppell Joan Ryan
Two of the Lords Commissioners of Her Majesty's Treasury

4th August 2004



SCHEDULE 1
Regulations 7(1) and 8(1)


Information required prior to the conclusion of the contract


     1. The identity and the main business of the supplier, the geographical address at which the supplier is established and any other geographical address relevant to the consumer's relations with the supplier.

     2. Where the supplier has a representative established in the consumer's State of residence, the identity of that representative and the geographical address relevant to the consumer's relations with him.

     3. Where the consumer's dealings are with any professional other than the supplier, the identity of that professional, the capacity in which he is acting with respect to the consumer, and the geographical address relevant to the consumer's relations with that professional.

     4. Where the supplier is registered in a trade or similar public register, the particulars of the register in which the supplier is entered and his registration number or an equivalent means of identification in that register.

     5. Where the supplier's activity is subject to an authorisation scheme, the particulars of the relevant supervisory authority.

     6. A description of the main characteristics of the financial service.

     7. The total price to be paid by the consumer to the supplier for the financial service, including all related fees, charges and expenses, and all taxes paid via the supplier or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

     8. Where relevant, notice indicating that: (i) the financial service is related to instruments involving special risks related to their specific features or the operations to be executed or whose price depends on fluctuations in the financial markets outside the supplier's control; and (ii) historical performances are no indicators for future performances.

     9. Notice of the possibility that other taxes or costs may exist that are not paid via the supplier or imposed by him.

     10. Any limitations of the period for which the information provided is valid.

     11. The arrangements for payment and for performance.

     12. Any specific additional cost for the consumer of using the means of distance communication, if such additional cost is charged.

     13. Whether or not there is a right of cancellation and, where there is a right of cancellation, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay in accordance with regulation 13, as well as the consequences of not exercising that right.

     14. The minimum duration of the distance contract in the case of financial services to be performed indefinitely or recurrently.

     15. Information on any rights the parties may have to terminate the distance contract early or unilaterally by virtue of the terms of the contract, including any penalties imposed by the contract in such cases.

     16. Practical instructions for exercising the right to cancel in accordance with regulation 9 indicating, among other things, the address at which the notice of cancellation should be left or to which it should be sent by post, and any facsimile number or electronic mail address to which it should be sent.

     17. The EEA State or States whose laws are taken by the supplier as a basis for the establishment of relations with the consumer prior to the conclusion of the distance contract.

     18. Any contractual clause on the law applicable to the distance contract or on the competent court.

     19. In which language, or languages: (i) the contractual terms and conditions, and the prior information specified in this Schedule, are supplied; and (ii) the supplier, with the agreement of the consumer, undertakes to communicate during the duration of the distance contract.

     20. Whether or not there is an out-of-court complaint and redress mechanism for the consumer and, if so, the methods for having access to it.

     21. The existence of guarantee funds or other compensation arrangements, except to the extent that they are required by Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit guarantee schemes[26] or Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor compensation schemes[27].



SCHEDULE 2
Regulation 7(4)(b)


Information required in the case of voice telephone communications


     1. The identity of the person in contact with the consumer and his link with the supplier.

     2. A description of the main characteristics of the financial service.

     3. The total price to be paid by the consumer to the supplier for the financial service including all taxes paid via the supplier or, if an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

     4. Notice of the possibility that other taxes or costs may exist that are not paid via the supplier or imposed by him.

     5. Whether or not there is a right to cancel and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay in accordance with regulation 13, as well as the consequences of not exercising that right.

     6. That other information is available on request and the nature of that information.


EXPLANATORY NOTE

(This note is not part of the Regulations)


These Regulations give effect in the United Kingdom to Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC (O.J. L 271, 9.10.2002, p.16) ("the Directive") so far as it is not given effect by rules made by the Financial Services Authority under the Financial Services and Markets Act 2000 or made by a professional body designated under that Act.

Regulations 3 to 5 identify the transactions to which the substantive provisions of these Regulations apply. Regulation 3 defines these as "distance contracts", as defined in regulation 2(1) (or, for the purposes of regulation 15, comparable supplies of financial services) made on or after the date on which the Regulations come into force. Regulation 4 then disapplies certain provisions from various categories of contract and supply where equivalent provision is made by other regimes: paragraph (1) excludes contracts and supplies made by suppliers established in another State within the European Economic Area where the law of that State regulates the contract or supply in accordance with the Directive; paragraphs (2) to (4), taken with paragraphs (5) and (6), exclude contracts and supplies in relation to which effect is given to the Directive by rules made or approved by the Financial Services Authority under the Financial Services and Markets Act 2000. Regulation 5 gives effect to Article 1(2) of the Directive in the light of Recital (17) in the Directive's preamble, under which the substantive provisions of the Directive only apply to an "initial service agreement" with a financial services supplier or the first in a series of similar operations, and not to every subsequent transaction carried out under that agreement or in that series.

Regulation 6 sets out how the Regulations apply in cases where financial services are marketed through an intermediary, as contemplated by Recital (19) in the preamble to the Directive. Some provisions of the Regulations apply to the intermediary instead of the supplier; others apply to either or both of them; others again still apply only to the supplier.

Regulations 7 and 8 and the Schedules contain the first set of main provisions, requiring suppliers of financial services, where the Regulations apply, to provide consumers with certain information listed in the Schedules. This information generally has to be provided before the consumer is bound by a distance contract for supply of the financial services in question.

Regulations 9 to 13 contain the next set of main provisions, giving consumers a right to cancel most distance contracts for financial services during a set period after commencement of the contract.

Regulation 9 contains the right to cancel, specifying the means by which the right can be exercised and defining the effect of cancellation as termination of the contract at the time at which the notice of cancellation is given. Regulation 10 defines the period during which the cancellation right can be exercised: generally from the time the consumer is bound by the contract until 14 days after that, or until 14 days after the information required by regulation 8 is provided if later, but until 30 days after the later of those dates in the case of a contract for a personal pension and until 30 days after the day on which the consumer is informed that the distance contract has been concluded in the case of a contract for life insurance. Paragraph (1) of regulation 11 lists certain types of contract to which, as permitted by the Directive, the cancellation right does not apply except in the circumstances dealt with in paragraphs (2) and (3) of that regulation.

Regulation 12 provides that, where a distance contract is cancelled under regulation 9, certain other subsidiary distance contracts connected with that contract - defined in paragraph (1) as "attached contracts" - are automatically cancelled too.

Regulation 13 then provides for the consequences of cancellation of distance contracts, whether by notice under regulation 9 or automatically under regulation 12: the supplier must refund any sums received from the consumer under the contract, less a proportionate charge for any services already supplied, and must release and return to the consumer any security taken under the contract; the consumer must repay to the supplier any money paid to the consumer under the contract, and return any property acquired under it.

Regulation 14 provides that, where a plastic card issued to a consumer is used fraudulently by someone else to make a payment in connection with a distance contract (other than where the Consumer Credit Act 1974 (c. 39) covers the matter), the consumer is entitled to cancel the payment and to have all sums paid recredited or returned by the card issuer.

Regulation 15 prevents consumers from being bound by any obligation in respect of financial services supplied to them but for which they have not asked; and makes it a criminal offence to demand or assert a right to payment with any such supply, or to take or threaten enforcement action with a view to obtaining payment for such a supply, without reason to believe payment is legally due.

Regulation 16 is designed to prevent the Regulations being undermined. It renders void any contractual term which is inconsistent with any provision of these Regulations or purports to impose on a consumer additional or greater duties or liabilities than those provided for in the Regulations; and it overrides any contractual term which aims to apply the law of a non-EEA State so as to prevent a contract or supply closely connected with an EEA State from being governed by the provisions of the Directive.

Regulations 17 to 21 and 26 to 28 contain or provide for enforcement mechanisms in relation to the substantive provisions of the Regulations.

Paragraph (1) of regulation 17 specifies for these purposes that the enforcement authority for certain types of distance contract or supply listed in paragraph (2) is the Financial Services Authority, and that the enforcement authorities for other distance contracts and supplies are the Office of Fair Trading with local weights and measures authorities (in Great Britain) or with the Department of Enterprise, Trade and Investment (in Northern Ireland). Regulation 18 requires any such enforcement authority to consider complaints made to it about breaches of the Regulations unless the complaint is frivolous or vexatious or another enforcement authority has agreed to deal with it. Regulation 19 enables enforcement authorities to apply to the courts for injunctions against persons responsible for breaches of the Regulations, and regulations 20 and 21 provide for notification and publication of details about injunctions granted and undertakings given in relation to such breaches.

Regulations 26 and 27 bring the Directive, these Regulations, and relevant rules corresponding to them, within the scope of Part 8 of the Enterprise Act 2002 (c. 40), which contains special powers for the enforcement of certain consumer legislation; regulation 28 brings offences under these Regulations within the scope of section 230 of that Act, so that local weights and measures authorities must notify the OFT of intended prosecutions under these Regulations.

Regulation 22 provides that breaches of certain provisions of the Regulations are criminal offences, provides for personal criminal liability on the part of certain officers or members of corporate and other bodies where they are responsible for the commission by such bodies of offences under the Regulations, and gives the enforcement authorities power to prosecute offences under the Regulations within their respective spheres of responsibility.

Regulation 23 provides that the functions of the FSA under the Regulations are to be treated as functions under the Financial Services and Markets Act 2000 (c. 8) so as to apply for the purposes of these Regulations various general powers and provisions of that Act.

Regulation 24 amends the Unfair Terms in Consumer Contracts Regulations 1999 (S.I. 1999/2083) so as to deem automatically unfair, for the purposes of those Regulations, any contractual term placing on a consumer the burden of proving whether a supplier or intermediary has complied with obligations deriving from the Directive or any provision implementing it.

Regulation 25 makes amendments to the Consumer Protection (Distance Selling) Regulations 2000 (S.I. 2000/2334) consequential upon the provisions of these Regulations.

Regulation 29 contains transitional provisions in connection with the application of these Regulations to regulated consumer credit agreements.

A full regulatory impact assessment of the effect that this instrument will have on the costs of business is available. Copies of it have been placed in the libraries of both Houses of Parliament, and copies are also available from the Savings and Investment Products Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and at www.hm-treasury.gov.uk.

Notes:

 [1] S.I. 2004/1283.back

[2] 1972 c. 68; by virtue of the amendment of section 1(2) of the European Communities Act 1972 by section 1 of the European Economic Area Act 1993 (c. 51) regulations may be made under section 2(2) of the European Communities Act to implement obligations of the United Kingdom created or arising by or under the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073) and the Protocol adjusting the Agreement signed at Brussels on 17th March 1993 (Cm 2183).back

[3] 1974 c. 39.back

[4] 2000 c. 8.back

[5] O.J. L 271, 9.10.2002, p. 16; the Directive applies to EEA States which are not Member States of the European Community by virtue of Decision No. 47/2003 of the EEA Joint Committee dated 16th May 2003 (O.J. L 193, 31.7.2003, p. 18).back

[6] S.I. 2001/544, as amended by S.I. 2001/3544, S.I. 2002/682, S.I. 2002/1310, S.I. 2002/1776, S.I. 2002/1777, S.I. 2003/1475, S.I. 2003/1476, S.I. 2003/2822 and S.I. 2004/1610.back

[7] S.I. 2003/2426.back

[8] Article 72B was inserted by article 11 of S.I. 2003/1476, and comes into force on 31st October 2004 for certain purposes and on 14th January 2005 for other purposes: see article 1(3) of S.I. 2003/1476.back

[9] S.I. 2000/2334.back

[10] 1992 c. 35; section 6A was inserted by regulation 11(3) of S.I. 1997/1081.back

[11] Subsection (3B) was inserted into section 84 by regulation 21(5) of S.I. 2000/2334.back

[12] 1971 c. 30; section 3A was inserted by section 1 of the Unsolicited Goods and Services (Amendment) Act 1975 (c. 13).back

[13] S.I. 1976/57 (N.I. 1), amended by S.I. 2000/2334 and S.R. 2004 No. 23.back

[14] Article 9C was inserted by article 4 of S.I. 2002/682.back

[15] S.I. 2003/1476, as amended by S.I. 2004/1610.back

[16] Articles 4(1), 5(1), 7 and 9(1) of S.I. 2003/1476 amend articles 21 and 25(1), insert article 39A, and amend article 53 of the Regulated Activities Order with effect from 31st October 2004 for certain purposes and from 14th January 2005 for other purposes: see article 1(3).back

[17] 1972 c. 70; the definition of "local authority" in section 270 has been repealed in part by section 102(2) of and Schedule 17 to the Local Government Act 1985 (c. 51) and amended by section 1(5) of the Local Government (Wales) Act 1994 (c. 19).back

[18] 1994 c. 39.back

[19] 1972 c. 9 (N.I.).back

[20] S.I. 1999/2083, amended by S.I. 2001/1186 and S.I. 2003/3182.back

[21] S.I. 2000/2334.back

[22] 2002 c. 40.back

[23] S.I. 2003/1374.back

[24] S.I. 2003/1376.back

[25] 1973 c. 41.back

[26] O.J. L 135, 31.5.1994, p. 5.back

[27] O.J. L 84, 26.3.1997, p. 22.back

[a] Amended by Correction Slip. Page 13, regulation 21(2)(b), "regulation 18" should read "regulation 19". back



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