Distance communications

Part

ICOBS Insurance: Conduct of Business sourcebook

Chapter

Distance communications

Printed on: 03/07/2024

Rulebook at: 01/12/2009

ICOBS 3

Distance communications

ICOBS 3.1

Distance marketing

06/01/2008

Application

ICOBS 3.1.1

This section applies to a firm that carries on any distance marketing activity from an establishment in the United Kingdom, with or for a consumer in the United Kingdom or another EEA State.

06/01/2008

Guidance on the Distance Marketing Directive

ICOBS 3.1.2

Guidance on expressions derived from the Distance Marketing Directive and on the Directive's application in the context of insurance mediation activity can be found in ICOBS 3 Annex 1 G.

06/01/2008

The distance marketing disclosure rules

ICOBS 3.1.3

A firm must provide a consumer with the distance marketing information (ICOBS 3 Annex 2 R) in good time before conclusion of a distance contract.

[Note: article 3(1) of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.4

The rules setting out the responsibilities of insurers and insurance intermediaries for producing and providing information apply to requirements in this section to provide information (see ICOBS 6.1.1 R).

06/01/2008

ICOBS 3.1.5

A firm must ensure that the distance marketing information, the commercial purpose of which must be made clear, is provided in a clear and comprehensible manner in any way appropriate to the means of distance communication used, with due regard, in particular, to the principles of good faith in commercial transactions, and the legal principles governing the protection of those who are unable to give their consent, such as minors.

[Note: article 3(2) of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.6

When a firm makes a voice telephony communication to a consumer, it must make its identity and the purpose of its call explicitly clear at the beginning of the conversation.

[Note: article 3(3)(a) of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.7

A firm must ensure that the information on contractual obligations to be communicated to a consumer during the pre-contractual phase is in conformity with the contractual obligations which would result from the law presumed to be applicable to the distance contract if that contract is concluded.

[Note: article 3(4) of the Distance Marketing Directive]

06/01/2008

Terms and conditions, and form

ICOBS 3.1.8

A firm must communicate to the consumer all the contractual terms and conditions and the information referred to in the distance marketing disclosure rules in writing or another durable medium available and accessible to the consumer in good time before conclusion of any distance contract.

[Note: article 5(1) of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.9

A firm will provide or communicate information or contractual terms and conditions to a consumer if another person provides or communicates it to the consumer on its behalf.

06/01/2008

Commencing performance of the distance contract

ICOBS 3.1.10

The performance of the distance contract may only begin after the consumer has given his approval.

[Note: article 7(1) of the Distance Marketing Directive]

06/01/2008

Exception: distance contract as a stage in the provision of another service

ICOBS 3.1.11

This section does not apply to a distance contract to act as insurance intermediary, if the distance contract is concluded merely as a stage in the provision of another service by the firm or another person.

[Note: recital 19 to the Distance Marketing Directive]

06/01/2008

Exception: successive operations

ICOBS 3.1.12

In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this section only apply to the initial agreement.

[Note: article 1(2) of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.13

If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the distance marketing disclosure rules will only apply:

(1) when the first operation is performed; and
(2) if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed to be the first in a new series of operations).

[Note: recital 16 and article 1(2) of the Distance Marketing Directive]

06/01/2008

Exception: voice telephony communications

ICOBS 3.1.14

(1) In the case of a voice telephony communication, and subject to the explicit consent of the consumer, only the abbreviated distance marketing information (ICOBS 3 Annex 3 R) needs to be provided during that communication.
(2) However, unless another exemption applies (such as the exemption for means of distance communication not enabling disclosure) a firm must still provide the distance marketing information (ICOBS 3 Annex 2 R) in writing or another durable medium available and accessible to the consumer in good time before conclusion of any distance contract.

[Note: articles 3(3)(b) and 5(1) of the Distance Marketing Directive]

06/01/2008

Exception: Means of distance communication not enabling disclosure

ICOBS 3.1.15

A firm may provide the distance marketing information (ICOBS 3 Annex 2 R) and the contractual terms and conditions in writing or another durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a consumer's request using a means of distance communication that does not enable the provision of that information in that form in good time before conclusion of any distance contract.

[Note: article 5(2) of the Distance Marketing Directive]

06/01/2008

Consumer's right to request paper copies and change the means of communication

ICOBS 3.1.16

At any time during the contractual relationship the consumer is entitled, at his request, to receive the contractual terms and conditions on paper. The consumer is also entitled to change the means of distance communication used unless this is incompatible with the contract concluded or the nature of the service provided.

[Note: article 5(3) of the Distance Marketing Directive]

06/01/2008

Unsolicited services

ICOBS 3.1.17

(1) A firm must not enforce, or seek to enforce, any obligations under a distance contract against a consumer, in the event of an unsolicited supply of services, the absence of reply not constituting consent.
(2) This rule does not apply to the tacit renewal of a distance contract.

[Note: article 9 of the Distance Marketing Directive]

06/01/2008

Mandatory nature of consumer's rights

ICOBS 3.1.18

If a consumer purports to waive any of the consumer's rights created or implied by the rules in this section, a firm must not accept that waiver, nor seek to rely on or enforce it against the consumer.

[Note: article 12 of the Distance Marketing Directive]

06/01/2008

ICOBS 3.1.19

If a firm proposes to enter into a distance contract with a consumer that will be governed by the law of a country outside the EEA, the firm must ensure that the consumer will not lose the protection created by the rules in this section if the distance contract has a close link with the territory of one or more EEA States.

[Note: articles 12 and 16 of the Distance Marketing Directive]

06/01/2008

ICOBS 3.2

E-Commerce

06/01/2008

Application

ICOBS 3.2.1

This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom, with or for a person in the United Kingdom or another EEA State.

06/01/2008

Information about the firm and its products or services

ICOBS 3.2.2

A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:

(1) its name;
(2) the geographic address at which it is established;
(3) the details of the firm, including its e-mail address, which allow it to be contacted and communicated with in a direct and effective manner;
(4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA register and includes its FSA register number;
(5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:

(a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
(b) the professional title and the EEA State where it was granted;
(c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and

(6) where the firm undertakes an activity that is subject to VAT, its VAT number.

[Note: article 5(1) of the E-Commerce Directive]

06/01/2008

ICOBS 3.2.3

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.

[Note: article 5(2) of the E-Commerce Directive]

06/01/2008

ICOBS 3.2.4

A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:

(1) the commercial communication must be clearly identifiable as such;
(2) the person on whose behalf the commercial communication is made must be clearly identifiable;
(3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
(4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.

[Note: article 6 of the E-Commerce Directive]

06/01/2008

ICOBS 3.2.5

An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.

[Note: article 7(1) of the E-Commerce Directive]

06/01/2008

Requirements relating to the placing and receipt of orders

ICOBS 3.2.6

A firm must (except when otherwise agreed by parties who are not consumers):

(1) give an ECA recipient the following information, clearly, comprehensibly and unambiguously, and prior to the order being placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract;
(b) whether or not the concluded contract will be filed by the firm and whether it will be accessible;
(c) the technical means for identifying and correcting input errors prior to the placing of the order; and
(d) the languages offered for the conclusion of the contract;

(2) indicate any relevant codes of conduct to which it subscribes and provide information on how those codes can be consulted electronically;
(3) (when an ECA recipient places an order through technological means), acknowledge the receipt of the recipient's order without undue delay and by electronic means (an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them); and
(4) make available to an ECA recipient appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors prior to the placing of an order.

[Note: articles 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive]

06/01/2008

ICOBS 3.2.7

Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.

[Note: article 10(3) of the E-Commerce Directive]

06/01/2008

Exception: contract concluded by e-mail

ICOBS 3.2.8

The requirements relating to the placing and receipt of orders do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.

[Note: article 10(4) and 11(3) of the E-Commerce Directive]

06/01/2008

ICOBS 3 Annex 1

Guidance on the Distance Marketing Directive

06/01/2008

This Annex belongs to ICOBS 3.1.2 G

Q1. What is a distance contract?

To be a distance contract, a contract must be concluded under an 'organised distance sales or service-provision scheme' run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or otherwise) of one or more means of distance communication up to and including the time at which the contract is concluded.

So:

• the firm must have put in place facilities designed to enable a consumer to deal with it exclusively at a distance; and

• there must have been no simultaneous physical presence of the firm and the consumer throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the internet, through a telemarketing operation or by post, will normally be distance contracts.

Q2. What about a firm that normally operates face-to-face but occasionally uses distance means?

If a firm normally operates face-to-face and has no facilities in place enabling a consumer to deal with it customarily by distance means, there will be no distance contract. A one-off transaction effected exclusively by distance means to meet a particular contingency or emergency will not be a distance contract.

Q3. What is meant by "simultaneous physical presence"?

A consumer may visit the firm's local office in the course of the offer, negotiation or conclusion of a contract. Wherever, in the literal sense, there has been "simultaneous physical presence" of the firm and the consumer at the time of such a visit, any ensuing contract will not be a distance contract.

Q4. Does the mere fact that an intermediary is involved make the sale of a product or service a distance contract?

No.

Q5. When is a contract concluded?

A contract is concluded when an offer to be bound by it has been accepted. An offer in the course of negotiations (for example, an offer by an insurer to consider an application) is not an offer to be bound, but is part of a pre-contractual negotiation.
A consumer will provide all the information an insurer needs to decide whether to accept a risk and to calculate the premium. The consumer may do this orally, in writing or by completing a proposal form. The response by an insurer, giving a quotation to the consumer specifying the premium and the terms, is likely to amount to an offer of the terms on which the insurer will insure the risk. Agreement by the consumer to those terms is likely to be an acceptance which concludes the contract.
In other cases where the insurer requires a signed proposal form (for example, some pure protection contracts), the proposal form may amount to an offer by the consumer on which the insurer decides whether to insure the risk and in such cases the insurer's response is likely to be the acceptance.

Q6. What if the contract has not been concluded but cover has commenced?

Where the parties to a contract agree that insurance cover should commence before all the terms and conditions have been agreed, the consumer should be provided with information required to be provided before conclusion of the contract to the extent that agreement has been reached.

Q7. How does the Directive apply to insurance intermediaries' services?

The FSA expects the Distance Marketing Directive to apply to insurance intermediaries' services only in the small minority of cases where:

• the firm concludes a distance contract with a consumer covering its insurance mediation activities which is additional to any insurance contract which it is marketing; and

• that distance contract is concluded other than merely as a stage in the effecting or carrying out of an insurance contract by the firm or another person: in other words it has some continuity independent of an insurance contract, as opposed, for example, to being concluded as part of marketing an insurance contract.

Q8. Can you give examples of when the Directive would and would not apply to insurance intermediaries' services?

The rules implementing the Distance Marketing Directive will not apply in the typical case where an insurance intermediary sells an insurance contract to a consumer on a one-off basis, even if the insurance intermediary is involved in the renewal of that contract and handling claims under it.
Nor will the Directive apply if an insurance intermediary, in its terms of business, makes clear that it does not, in conducting insurance mediation activities, act contractually on behalf of, or for, the consumer.
An example of when the Distance Marketing Directive would apply would be a distance contract under which an insurance intermediary agrees to provide advice on a consumer's insurance needs as and when they arise.

Q9. When would the exception for successive operations apply?

We consider that the renewal of a policy falls within the scope of this exception. So, the distance marketing disclosure rules would only apply in relation to the initial sale of a policy, and not to subsequent renewals provided that the new policy is of the same nature as the initial policy. However, unless there is an initial service agreement in place, the exclusion would only apply where the renewal takes place no later than one year after the initial policy was taken out or one year after its last renewal. If the policy terms have changed, firms will need to consider what information should be disclosed about those changes in accordance with the requirement to disclose appropriate information about a policy (see ICOBS 6.1.5 R), as well as ensuring their effectiveness under contract law.

06/01/2008

ICOBS 3 Annex 2

Distance marketing information

06/01/2008

This Annex belongs to ICOBS 3.1.3 R

Distance marketing information

The firm

(1)

The name and the main business of the firm, the geographical address at which it is established and any other geographical address relevant for the consumer's relations with the firm.

(2)

Where the firm has a representative established in the consumer's EEA State of residence, the name of that representative and the geographical address relevant for the consumer's relations with the representative.

(3)

When the consumer's dealings are with any professional other than the firm, the identity of that professional, the capacity in which he is acting with respect to the consumer, and the geographical address relevant for the consumer's relations with that professional.

(4)

An appropriate statutory status disclosure statement (GEN 4), a statement that the firm is on the FSA Register and its FSA registration number.

The financial service

(5)

A description of the main characteristics of the service the firm will provide.

(6)

The total price to be paid by the consumer to the firm for the financial service, including all related fees, charges and expenses, and all taxes paid through the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(7)

Where relevant, notice indicating that the financial service is related to instruments involving special risks related to their specific features or the operations to be executed or whose price depends on fluctuations in the financial markets outside the firm's control and that past performance is no indicator of future performance.

(8)

Notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it.

(9)

Any limitations on the period for which the information provided is valid, including a clear explanation as to how long a firm's offer applies as it stands.

(10)

The arrangements for payment and for performance.

(11)

Details of any specific additional cost for the consumer for using a means of distance communication.

The distance contract

(12)

The existence or absence of a right to cancel under the cancellation rules (ICOBS 7) and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay (or which may not be returned to the consumer) in accordance with those rules, as well as the consequences of not exercising the right to cancel.

(13)

The minimum duration of the contract, in the case of services to be performed permanently or recurrently.

(14)

Information on any rights the parties may have to terminate the contract early or unilaterally under its terms, including any penalties imposed by the contract in such cases.

(15)

Practical instructions for exercising any right to cancel, including the address to which any cancellation notice should be sent.

(16)

The EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the consumer prior to the conclusion of the contract.

(17)

Any contractual clause on law applicable to the contract or on the competent court, or both.

(18)

In which language, or languages, the contractual terms and conditions and the other information in this Annex will be supplied, and in which language, or languages, the firm, with the agreement of the consumer, undertakes to communicate during the duration of the contract.

Redress

(19)

How to complain to the firm, whether complaints may subsequently be referred to the Financial Ombudsman Service and, if so, the methods for having access to it, together with equivalent information about any other applicable named complaints scheme.

(20)

Whether compensation may be available from the compensation scheme, or any other named compensation scheme, if the firm is unable to meet its liabilities, and information about any other applicable named compensation scheme.

[Note: Recitals 21 and 23 to, and article 3(1) of, the Distance Marketing Directive]

06/01/2008

ICOBS 3 Annex 3

Abbreviated distance marketing information

06/01/2008

This Annex belongs to ICOBS 3.1.14 R

Abbreviated distance marketing information

(1)

The identity of the person in contact with the consumer and his link with the firm.

(2)

A description of the main characteristics of the financial service.

(3)

The total price to be paid by the consumer to the firm for the financial service including all taxes paid through the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(4)

Notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it.

(5)

The existence or absence of a right to cancel in accordance with the cancellation rules (ICOBS 7) and, where the right to cancel exists, its duration and the conditions for exercising it, including information on the amount the consumer may be required to pay (or which may not be returned to the consumer) on the basis of those rules.

(6)

That other information is available on request and what the nature of that information is.

[Note: article 3(3)(b) of the Distance Marketing Directive]

06/01/2008