Distance marketing of financial services: your rights

This guidance is for England, Scotland and Wales

The Financial Services (Distance Marketing) Regulations 2004 apply to those consumer financial services, including banking, credit and insurance, that are marketed and sold at a distance (such as online, telephone and mail order) without face-to-face contact between you and the supplier or intermediary (such as an insurance broker).

Under the Regulations, the supplier must provide you with information before you go ahead with the purchase of a financial service, give you notice of your right to cancel the contract and tell you how long the cancellation period is. If you cancel a contract, the supplier must refund you within a period set out in the Regulations. You do not have to pay for financial services you received, but did not request.

Activities relating to a consumer hire agreement are not financial services that fall within these regulations; they are covered under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

WHAT INFORMATION SHOULD A SUPPLIER PROVIDE?

PRE-PURCHASE INFORMATION

The supplier must give you information that is set out in the Regulations in good time and before the financial services contract is finalised. You are entitled to expect that the information is clear, easily understood and accurately reflects the contract. The supplier must clearly explain what their business purpose is.

Information about the supplier:

the supplier's identity, address and main business
the identity and address of any representative used by the supplier that is relevant to the purchase
if you deal with a professional other than the supplier, you must be given the professional's identity, address and the capacity in which they are acting for you
where the supplier is registered on a trade / public register, details of that registration and the registration number must be provided
where the supplier's activity is subject to an authorisation scheme, details of the supervisory body must be given

Information about the service:

a description of the financial service
the total price or the manner for calculating the price, including all fees, charges, expenses and taxes paid via the supplier
where relevant, a notice indicating the risks relevant to the particular financial service or that the price depends on fluctuations of financial markets outside the supplier's control and past performance does not indicate future performance
a notice that other taxes and costs may exist that are not paid / imposed by the supplier
details of the time period for which the information is valid
arrangements for payment and performance
any additional costs

Contractual information:

whether or not there is a right of cancellation and where there is this right, its duration and the details of how to cancel. This includes information about the amount you may have to pay as well as the consequences of not exercising your right to cancel
the minimum duration of the contract, where relevant
termination rights and any penalties that may be imposed
practical instructions for cancelling the contract, such as the address or email address for sending the notice of cancellation
the laws, any contractual clauses and language that apply to the contract

Complaint and redress information:

details of any complaint and redress scheme and how you can access it
details of any guarantee funds or other compensation arrangements

If the supplier of a financial service contacts you by phone, they must clearly identify themselves and give the business purpose of their call at the beginning of the conversation with you.

If you agree, the supplier only needs to give you the following information over the phone:

the caller's identity and the link they have with the supplier
the total price or manner in which the price can be calculated, including all taxes paid via the supplier
notice that other taxes or costs may exist that are not paid / imposed via the supplier
whether or not there is a right of cancellation and where there is this right, its duration and the details of how to cancel, including information about the amount you may have to pay in accordance with the Regulations, as well as the consequences of not exercising your right to cancel
that information is available on request and the nature of that information

WRITTEN AND ADDITIONAL INFORMATION

The supplier must give you all the terms and conditions that apply to the financial service contract, as well as the pre-purchase information, in writing or in another durable medium. 'Durable medium' means any method that enables you to store information addressed to you in a way you can easily access, for a reasonable period of time and in a way that allows you to retrieve it in an unchanged form. You must be given this either in good time before you are legally bound by the contract or immediately after the contract is finalised, if it cannot be provided beforehand.

WHAT CANCELLATION RIGHTS DO I HAVE?

You have the right to cancel a financial services distance contract by word of mouth - where the supplier has indicated they will accept this type of cancellation - in writing or in another durable form. If you cancel in writing, you can leave it at the last known address you have for the supplier (it is valid from the day it was left) or send it by post or email (it is valid from the day it was posted / sent). You can also send it by other electronic means such as via an internet address or website.

Where there is a secondary distance contract attached to a financial services distance contract (for example, credit card insurance taken out when you apply for the card) and they are both provided by the same supplier or a third party connected to the supplier, cancellation of the main contract automatically cancels the secondary contract unless you specify otherwise.

WHAT IS THE LENGTH OF THE CANCELLATION PERIOD?

If the supplier has given you the written information and terms and conditions specified in the Regulations, the cancellation period begins on the day after the day the financial services distance contract was finalised and ends 14 calendar days later.

If the supplier does not give you the written information specified in the Regulations on or before the contract is finalised, but provides the information, as well as the terms and conditions, at a later stage. Then the cancellation period begins the day after the day you receive them and ends 14 calendar days later.

In the case of distance contracts for life insurance and personal pensions, the cancellation period is 30 calendar days.

ARE THERE ANY EXCEPTIONS TO THE RIGHT TO CANCEL?

The Regulations set out those contracts to which the right to cancel does not apply:

a contract for a financial service where the price depends on fluctuations in the financial market that are outside the supplier's control and that might occur during the cancellation period - for example, foreign exchange
a contract whose performance has been fully completed at your request before you give notice of cancellation
a connected insurance contract that covers travel risks and has a total duration of less than a month
a contract where a supplier provides credit and your requirement to repay is secured by a legal mortgage on land
a credit agreement cancelled under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
a credit agreement cancelled under the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010
a restricted use credit agreement or a bridging loan to finance the purchase of land or an existing building

However, if the supplier does not comply with their obligations to provide you with written information and terms and conditions, you can still cancel an excepted contract, providing you have not received this information by the end of the sixth day after the day the contract was finalised. You can cancel it during the period between the seventh day and the day when you receive the last of the written information and terms and conditions.

HOW DO I OBTAIN A REFUND?

The supplier must refund you as soon as possible or, in any event, within 30 calendar days from the date of cancellation. Note that the 30 calendar days refund period can commence from the date the supplier actually received the notice of cancellation, rather than the date you cancelled, if they can prove it is later. You should therefore follow up an oral cancellation as soon as possible with written confirmation. The supplier can deduct a reasonable charge for services actually provided but only if you were informed that charges would be payable. You cannot be charged if services were provided before the cancellation period without you asking for them in advance.

If you provided any security as part of the contract, it must be returned to you after you have cancelled.

If you received a sum of money or property from the supplier, you must return it within 30 calendar days from the date you cancelled the contract.

MY CARD WAS USED FRAUDULENTLY TO BUY A FINANCIAL SERVICE: WHAT ARE MY RIGHTS?

You are entitled to ask for the payment to be cancelled and the amount recredited to your account or returned to you by the card issuer. If the card issuer believes the payment was authorised, it is for them to prove it.

I RECEIVED A DEMAND FOR PAYMENT FOR A FINANCIAL SERVICE I HAVEN'T BOUGHT: WHAT ARE MY RIGHTS?

If you received unsolicited financial services - those that you have not asked for - you do not have to pay for them.

ENFORCEMENT OF THE REGULATIONS

Offences are committed if a supplier fails to provide details of their identity and their commercial purpose. Supplying unsolicited financial services, demanding payment, threatening legal proceedings, placing you on a defaulter's register or starting / threatening collection procedures are all offences.

These Regulations are dealt with by the Financial Conduct Authority (see the FCA Handbook - distance marketing) and Trading Standards. If you have a complaint, you should report it to the Citizens Advice consumer service.

IN THIS UPDATE

No major changes.

Last reviewed / updated: October 2023

Key legislation

Please note

This information is intended for guidance; only the courts can give an authoritative interpretation of the law.

The guide's 'Key legislation' links may only show the original version of the legislation, although some amending legislation is linked to separately where it is directly related to the content of a guide. Information on amendments to legislation can be found on each link's 'More Resources' tab.

For further information in England and Wales contact the Citizens Advice consumer service on 0808 2231133. In Scotland contact Advice Direct Scotland on 0808 164 6000. Both provide free, confidential and impartial advice on consumer issues.