The new withdrawal button in finance

Currently, the European Union wide implementation of a withdrawal button for financial services is being planned. On 27 and 28 March 2023, the European Parliament's Committee on Internal Market and Consumer Protection (IMCO) will vote on the EU Commission's proposal for a Directive amending the Consumer Rights Directive 2011/83/EU as regards integration for distance financial services contracts, and repealing the Financial Services Directive 2002/65/EC. If the proposal is adopted, it is expected to be published in the Official Journal of the EU in the second half of 2023.

Since July 2022, it has been the law in Germany that the trader who offer consumers the conclusion of a paid continuing obligation online must ensure, pursuant to Section 312k of the German Civil Code (BGB), by means of a two-stage procedure, that a cancellation button is made available on the website (or app) in an easily accessible and clearly recognisable manner, by means of which the consumer can also terminate the continuing obligation.

Even though there is usually no order button when contracts for financial services are concluded online, a two-stage system is now also to be created, based on the structuring of Section 312k BGB, according to which traders must provide a withdrawal button if the consumer concludes a financial services contract electronically in remote selling. The first stage will also concern the identification with entry of the contract details for the new withdrawal button; the second stage will also be a confirmation button such as "withdraw now". Likewise, there will be a confirmation of the withdrawal in a storable form.

The right of withdrawal itself is not to be extended; in the sense that the right of withdrawal will continue not to apply to financial services whose price is subject to fluctuations on the financial market over which the trader has no control and which may occur within the withdrawal period; travel and baggage insurance policies or similar short-term insurance policies with a term of less than one month; and contracts which, at the express request of the consumer, have already been fully performed by both parties before the consumer exercises his right of withdrawal.

In contrast to the cancellation button pursuant to Section 312k BGB, where the cancellation of the contract only takes effect at the specific possible time of cancellation, it should be noted that the contract withdrawn from within the 14-day withdrawal period via the withdrawal button is being exercised immediately.

In addition, the proposal contains rules relating to the structure, design, function or method of operation of the online user interfaces used by traders, which could influence or distort consumers' ability to make free, autonomous and informed choices. It also aims to ensure adequate explanations about online tools, as well as the possibility to interact with a human being representing the trader. As a result of the Amending Directive, the Financial Services Directive currently still in force, will no longer exist. The passages relevant to financial services will be reproduced in a separate chapter in the Consumer Rights Directive. However, these are only intended to be a "safety net", which means that more specific regulations will take precedence.

In order to achieve a consistently and uniformly high level of consumer protection throughout the internal market, the EU Commission is striving for complete harmonisation; consumers should also be able to negotiate and conclude contracts with financial service providers in another member state. Therefore, similar rules should apply to all financial service providers in all EU member states and consumers should be guaranteed the same rights. Accordingly, the withdrawal button is to be introduced throughout the EU (and, incidentally, it is being discussed that this should apply to all e-commerce).

Due to the planned full harmonisation, which means that member states of the EU may not implement the harmonised provisions through divergent law, the redesign of the websites of the addressees of the directive can and should start promptly. The current version of the proposed directive provides for heavy fines in the case of a serious cross-border infringement. In addition, a non-implemented or incorrectly implemented withdrawal button offers a target for warnings from competitors as well as competition and consumer protection associations.

Those who want and need to react to this should do so now.

In Germany, we are already continuously advising on the configuration and implementation of the cancellation button for online contracts on continuing obligations with consumers that are subject to a charge.In addition, we contribute to legislative procedures through active participation in interest groups such as Bitkom e.V.. Contact us for more information.