With the draft Law on the Amendment and Supplementation of the Consumer Protection Act (“Amendments to the CPA”), submitted by the Ministry of Economy and Industry, the requirements of Directive (EU) 2023/2673 are introduced with regard to contracts for financial services concluded at a distance.

The definition of “financial service” covers services related to monetary funds or financial instruments, which are offered to a consumer - banking and payment services, insurance, pension and savings products, etc.

In particular, the proposed draft strengthens the legal framework for consumer protection in the provision of financial services at a distance by regulating the following main rights and obligations:

1. Before the conclusion of a contract for a financial service at a distance, the trader shall provide the consumer with comprehensive pre-contractual information, including: its identification data, a description of the main characteristics of the service, the total price and all additional costs, the existence of a right of withdrawal and instructions for its exercise, applicable law, conditions for termination, etc. In this way, it is ensured that the consumer is in a position to make an informed decision even before being bound by the contract. The burden of proof that these requirements have been complied with logically lies with the trader.

2. The consumer’s right of withdrawal is regulated in detail, as the consumer does not owe compensation, penalties or other costs upon its exercise. The general withdrawal period is 14 days, and for certain financial services it is extended to 30 days. In cases where the trader has not provided the required pre-contractual information, however, the period may exceed 1 year. The right of withdrawal is nevertheless excluded for certain categories of services, for example those whose price depends on fluctuations in the financial markets.

3. In addition to the pre-contractual information, upon conclusion of the contract the trader is obliged to provide the consumer with additional appropriate explanations regarding the offered financial service, which enable the consumer to assess whether it is suitable for his needs and financial situation. This includes information on the main characteristics of the contract and the potential consequences for the consumer.

4. In view of the increasing digitalization, explicit requirements are introduced for the online interfaces of traders, as well as a prohibition on the use of misleading or manipulative practices. Traders are not allowed to design, organize or operate their online interfaces in a way that misleads or manipulates consumers or substantially impairs their ability to make a free and informed decision.

The proposed draft represents a significant step towards modernizing the legal framework for consumer protection in a digital environment and under increased transparency requirements. Through the introduction of clearer rules for the provision of information, limitation of unfair commercial practices and strengthened control over the online environment, the legislator aims to achieve a higher level of protection and trust in the relations between traders and consumers.

This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.