The European Commission has published a Communication explaining how Member States can, in exceptional cases, apply consumer protection rules to financial services provided over the Internet from other Member States, without infringing the 2000 E-commerce Directive. The E-commerce Directive aims to ensure that on-line services can be freely provided throughout the Community. Its cornerstone is the "Internal Market" clause, which enables a financial service provider to supply on-line services throughout the EU, as long as it complies with the rules and regulations prevailing in the Member State where it is established. However, the Directive does in certain limited circumstances allow Member States to impose their own additional rules on on-line services marketed to customers within their territory.
The Communication confirms that the Internal Market principle of mutual recognition of national laws and the principle of the country of origin must in general be applied to Information Society services. In other words, once a service provider is authorised to operate in one Member State, it is authorised to operate in them all.
Nevertheless, it emphasises that Article 3(4)-(6) of the Electronic Commerce Directive allows Member States to take measures against a given service provider, for reasons, amongst others, of consumer protection, including the protection of investors.
Such restrictions have to be proportionate to their stated objective and can only be imposed (except in cases of urgency and or of court action) after:
- the Member State where the service provider is established has been asked to take adequate measures and failed to do so;
- the intention to impose restrictions has been notified in advance to the Commission and to the Member State where the service provider is established.
The Commission's analysis does not systematically cover all the aspects of Article 3(4) to (6) of the Directive, but addresses only those aspects where the Commission has noted that there is a need for some explanation and assistance. It is mostly based on rulings made by the Court of Justice. In particular, the Communication clarifies, through use of specific examples from the Court, that in order for a restriction to be considered proportionate to its stated objective, a given measure must be both suited to that objective and the objective must not be attainable through less restrictive measures.
The Communication also reiterates that the derogation in Article 3(4) cannot be used to take general measures in respect of a whole category of financial services, such as investment funds or loans, but that any measure must be imposed on a case-by-case basis, against a specific financial service provided by a given operator.
The Communication has been prepared on the basis of extensive consultation and dialogue with national authorities, who participated in an expert group which met on several occasions. It was also sent out to selected market stakeholders for comments.