The new EU directive on e-commerce which became law in the UK on October 23 2002 could lead to brokers' and IFAs' websites being switched off by the Office of Fair Trading or local Trading Standards Departments if they do not conform to the new rules.
The warning comes from CETA, the UK's largest general insurance network. The new directive, which was introduced to provide a common trading framework across Europe, applies to anyone who advertises or sells goods or services to businesses or consumers online. It will therefore affect any broker or IFA who has a website or is planning to develop one.
There are two main elements to the new regulations: websites must identify the national law that will apply, and websites must ensure that certain information is given to customers
These demands are in addition to obligations required by organisations such as GISC or the Consumer Protection (Distance Selling) Regulations 2000.
As most financial products are governed by English Law, CETA believes that the first element can be easily addressed by ensuring that this is clearly stated on the site. However, the additional information which must be included means that most brokers and IFAs will have to redesign their sites.
In future, all sites must include: full contact details – address, e-mail and telephone number – to appear up-front not hidden away; contact details o relevant trade organisations - Mortgage Code, GISC - including links to their websites. This should include the intermediary's registration number and if they are a member of an authorisation scheme; details of the supervisory authority; clear pricing information including where appropriate any tax payable
If a site is transactional - i.e. products can be bought online - then they must also: describe exactly what the consumer has to do to complete the contact online; provide details of how the information relating to the product will be filed and how the consumer can access this information; identify how the consumer can correct any inputting errors they may make; if applicable, indicate the different languages in which the contract can be concluded.
Adrian Waters, CETA's director of technology, says: “Many intermediaries have invested in a website and are beginning to see more and more business being generated online. The changes required by the new directive are not too demanding but it is important that they are made. We are recommending to our members that they take the new directive seriously and undertake compliance checks on their sites.
“In future sites which are not correct could be shut down and customers will be legally entitled to cancel their order and if they are not happy with the product they have purchased could sue for damages for breach of statutory duty.
“CETA's advice to brokers is to make the changes and keep faith with e-commerce. All the research points to online sales of relatively simple products such household insurance and income protection policies increasing rapidly over the next few years. Developing a good interactive, customer friendly site remains a worthwhile investment.”