Distance contracts on the sale of financial services
Distance contracts on the sale of financial services means any contract concerning financial services concluded between a trader and a consumer under an organised distance sales, wherein one or more means of distance communication are used. For example, this refers to contacts concluded by telephone or online.
Financial services include:
- banking services,
- credit services,
- insurance services (including voluntary pension insurance),
- investment services, housing savings and
- payment services.
In reasonable time prior to the conclusion of the contract, the consumer has to be informed by the trader in writing about:
- the trader,
- the offered financial service,
- all details of the contract,
- the method of dispute resolution.
The information has to be unambiguous, clear, intelligible and adaptable to the used means of distance communication.
Where the contract has been concluded at the consumer’s explicit request using a means of distance communication which does not enable providing the mentioned information in reasonable time prior to conclusion of the contract or preliminary contract, the trader has to deliver the aforementioned immediately after the conclusion of the contract.
In any case, the consumer is entitled, at his/her request, to receive a copy of the concluded contract on paper at any time during the contractual relationship.
The right of unilateral termination of distance contracts on the sale of financial services
For conclusion of distance contracts on the sale of financial services, the consumer has right to unilaterally terminate such contract within the period of 14 days from the day of concluding the contract without giving any reason. Life insurance and voluntary pension insurance contracts are an exemption and in such cases the period for the unilateral termination of the contract is 30 days from the day when the consumer has been informed of the conclusion of the contract.
If the contract was concluded before the consumer received the contractual terms and conditions, as well as the prior information, the period for termination of the contract begins on the day on which the consumer receives the contractual terms and conditions and the prior information.
If the trader fails to fulfil any obligation stipulated by the Consumer Protection Act with regard to conclusion of the distance contract on the sale of financial services, the consumer has right to terminate the contract at any time.
When the consumer has no right to unilaterally terminate the distance contract on the sale of financial services?
The consumer has no right to unilaterally terminate the contract if:
- the contract has been concluded on financial services for which the price is dependent on fluctuations in the financial market which cannot be controlled by the trader and which may occur within the period for termination of the contract, such as service related to foreign exchange purchase and sale transactions, money market instruments, transferable securities, units in collective investment undertakings, financial futures contracts, including equivalent cash settled instruments, forward interest-rate agreements (FRAs), interest-rate, currency and equity swaps, options to acquire or dispose of any the aforementioned instruments, including equivalent cash settled instruments and in particular options on currency and on interest rates;
- the contract has been concluded on travel and baggage insurance policies or similar short-term insurance policies of less than one month’s duration;
- the distance contract on the sale of financial services has been fully completed at the consumer’s express request before the consumer exercises his/her right to terminate the contract.
The trader may begin to perform the contract before the expiry of the period for unilateral termination of the contract only subject to consumer’s explicit consent.
The trader is not entitled to request from the consumer to fulfil his/her obligations before the expiry of the period for unilateral termination of the contract.
How to terminate distance contract on the sale of financial services?
A consumer who wants to terminate distance contract on the sale of financial services has to inform the trader thereof in writing or he/she can deliver this notification on another durable medium within the period of 14 days from the day of conclusion of the contract without giving any reason for termination. Life and voluntary pension insurance contracts are an exemption, when the period for unilateral termination of the contract is 30 days from the day when the consumer has been informed of the conclusion of the contract.
If the contract was concluded before the consumer received the contractual terms and conditions, as well as the prior information, the period for termination of the contract begins on the day on which the consumer receives the contractual terms and conditions and the prior information.
If the trader fails to fulfil any obligation stipulated by the Consumer Protection Act with regard to conclusion of the distance contract on the sale of financial services, the consumer has right to terminate the contract at any time.
In any case, the consumer has to follow the instructions for exercising the right for unilateral termination of the contract given in the prior information delivered by the trader.
In any case, the consumer is entitled, at his/her request, to receive a copy of the concluded contract on paper at any time during the contractual relationship
When is distance contract on the sale of financial services terminated?
The contract is deemed terminated at the moment when the trader or the person appointed by the trader has received the notification of termination of the contract.
Effects of unilateral termination of distance contract on the sale of financial services
If the consumer terminated the contract in the abovementioned manner, he/she will not be responsible for any damages incurred by the trader and will not be obliged to pay any penalties or compensation for the termination of the contract.
However, both the consumer and the trader have to reimburse the payments received from the other party under the concerned contract. The trader has to forthwith and not later than 30 days as from the date the trader or the person appointed by the trader has been informed about the termination of the contract, reimburse all payments received from the consumer. The consumer also has to forthwith not later than 30 days as from the date of sending the notification on termination, reimburse all payments.
If the nature of the provided service is contrary to reimbursement, the consumer has to pay the price for a part of the service provided until the termination of the contract. The amount that the consumer would be liable to pay to the trader will in no case be such to be regarded as a penalty or a compensation for termination of the contract. However, the trader has no right to request from the consumer to pay any amount if he/she cannot prove that the consumer has been informed about this possibility in the prior information.
Effects of termination of the consumer contract on financial services on other contracts
If the consumer exercises his/her right to unilaterally terminate the contract, the termination of the contract on financial services will entail termination of any other contract that the consumer concluded, on the basis of or in relation to a contract on a financial service, with the trader or any other person who concluded the contract with the consumer on the basis of the previous agreement with the trader.
Burden of proof
In the event of a dispute, the burden of proof in respect of the trader’s obligation to provide prior information to the consumer and the consumer’s consent to conclusion of the contract and, where appropriate, its performance before the expiry of the period for termination of the contract, is on the trader. Any contractual term that would stipulate otherwise, are considered as unfair contractual term.
Provision of financial services unsolicited by the consumer
The cases of provision of financial services unsolicited by the consumer and for which the trader requires payment, represent unfair commercial practice.
If the trader without consumer’s consent provides a certain service, such service is considered as the trader’s promotional gift.
The provision in the trader’s general terms, offer, order or any other document which the trader has delivered to the consumer along with the unsolicited goods or service, and which would imply that the consumer’s silence means his/her acceptance of the offer, is considered null and void.
Cross-border commerce – prohibition of geo-blocking
A trader has to ensure equal conditions to all consumers with regard to access to goods and services, regardless of their nationality or place of residence, when the consumer requires:
A) a delivery of goods as follows:
- delivery to the state where in accordance with terms and conditions of traders business such delivery is provided,
- delivery to the location agreed with the trader, BUT to a Member State where the trader provides such an option in accordance with the general terms and conditions.
For example, in cases when a consumer from Croatia finds a good offer for a specific camera at a trader in Slovenia who does not provide delivery to Croatia, the consumer is entitled as any Slovenian citizen, to order the camera and take it at the trader’s premises or is entitled to the delivery at any other address in Slovenia.
If a trader does not provide a delivery to Croatia, this will not be considered as discrimination.
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B) receive from the trader electronically supplied services, but ONLY the services the main feature of which DOES NOT provide access and use of the copyright protected works or other protected content, including the selling copyright protected works or protected content in an intangible form.
For example, the access to a certain movie on the territory of an EU Member State may be limited by a copyright.
C) provision of services (which are not electronically supplied services) in a physical location within the territory of a Member State where the trader operates.
For example, a family from Croatia visits a theme park in France and wants to use a family ticket discount. They will be entitled to the same discount which would also have a family from France. |
If a trader in accordance with the regulations has to prohibit the access to goods and services, this will not be considered as geo-blocking. For example, if the goods to be sold do not meet the safety requirements.
With a view to prices, although the Regulation stipulates that traders may offer general terms and conditions of access, including net sale prices that differ among Member States or within a Member State, these prices have to be established on a non-discriminatory basis. In other words, if a trader for certain goods or services sets prices that differ among Member States, the reason for this should not be citizenship or consumer’s place of residence, but some other justified reason; for example: fees, taxes, excise taxes of a Member State concerned and so on.
The Regulation does not stipulate the specific justified reasons for setting different prices of goods and services in each Member State, but they will have to be specified as per individual case.
On the other hand, the Regulation stipulates that the traders should not redirect the consumer to an alternative version of online interface, other than the one to which they accessed first (rerouting), and if they do so, this has to be done in accordance with the consumer’s prior consent.
As regards payment methods, the trader independently sets applicable means of payment: credit transfer, direct debits or a card-based payment instrument with a card from the same brand and category. However it is required to fulfil certain requirements with regard to auto-identification, and the trader also individually the currency acceptable in payment transaction. For example, a trader may accept payments only with cards of a specific brand. However, the trader may not discriminate on the basis of the place of a Member State in which the card of a specific brand was issued.
It is important to mention that the trader may limit the delivery of goods or provision of services until he/she has received the receipt of the regular payment transaction.
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Furthermore, for card-based payments for which interchange fees are not regulated under Regulation establishing technical and business requirements for credit transfers and direct debits in euro, the trader may charge fees, but those charges cannot exceed the direct costs borne by the trader for the use of the payment instrument.
Information
- You live in any EU Member State or Norway, United Kingdom, Iceland or Liechtenstein;
- A trader is established in any EU Member State or Norway, United Kingdom, Iceland or Liechtenstein;
- You want to solve a dispute arising from online purchase of goods or services.
Competent authority and regulations
Ministry of the Economy and Sustainable Development
Ulica grada Vukovara 78
10 000 Zagreb
+385 1 6106 111
javnost@mingor.hr
Consumer Protection Act (OG
41/14,
110/15 and
14/19)
Act on Alternative Dispute Resolution for Consumer Cases (OG
121/16 and
32/19)
Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EZ
(OJ L 60 I, 2.3.2018)
Act on implementation of Regulation (EU) 2018/302 of the European Parliament and of the of the Council of 28 February 2018 on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EZ (OG
25/19)
Regulation on nomination of authorities for implementation of Regulation (EZ-a) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (Consumer Protection Cooperation Regulation) (OG
84/14,
120/14,
68/18 and
39/19)
Updated: 28 October 2020
