Can a telephone salesperson pitching insurance suggest that the consumer request concluding an agreement without seeing the terms of contract? As a rule, contract terms must be supplied before concluding an agreement, but a special provision pertaining to financial services became something of a headache for the Insurance Supervisory Authority.
Insurance was sold to consumers over the phone. The consumer was told that, should he so request, the insurance could be put made effective immediately and contract terms would be mailed to his home afterwards. The company felt that they could do this subject to the consumer's approval. The Consumer Agency found this practice to be not in line with the legislation on the distance selling of financial services. The justification for this exceptional practice was not based on the consumer's needs and wants, but rather the company's marketing purposes.
The distance selling of financial services such as insurance, credit and securities is governed by a dedicated chapter in the Consumer Protection Act. As the products are often abstract services, the point of departure of the legal provisions is that advance information and contract terms must be supplied to the consumer in good time before concluding an agreement. However, there is a special provision granting an exception to this basic rule, based on which information and contract terms may be supplied afterwards ”if the agreement is concluded at the consumer's request”, for example over the phone or via another medium which does not allow for contract terms to be supplied in advance. The Insurance Supervisory Authority requested the Consumer Agency's view on whether marketing can be based on this special provision by asking the consumer to make such a request.
A request is made at the requester's initiative
The special provision in the legislation is intended only for special circumstances. Such special circumstances could include, for instance, a customer needing insurance that becomes effective immediately and requesting this service over the phone. In other words, the special provision applies to situations where the consumer has a personal and acute need, based on which he - at his own initiative - requests that the agreement be concluded based on the information provided over the phone.
This type of approach may not, however, be standard procedure in offering services to consumers. If the intention were to allow market-based acts subject to the consumer's approval, the special provision would have been worded differently. As the law stands, it specifically grants consumers the opportunity to conclude an agreement under exceptional circumstances, which does not mean that companies are granted the right to deviate from the basic rule.
Financial Supervisory Authority and Insurance and Financial Ombudsman Bureau established
The Insurance Supervisory Authority and the Financial Supervision Authority were combined on 1 January 2009 as the new Financial Supervisory Authority (Fi-va). The new authority supervises, amongst others, banks, insurance companies, pension companies, other companies in the field of insurance, investment services companies, fund management companies and the stock exchange. At the same time, the Finnish Financial Ombudsman Bureau (FINE) was established, combining the Consumers' Insurance Bureau, the Advisory Office for Bank Customers and the Finnish Securities Complaint Board. The new authority provides advice and guidance to customers in matters related to banks, insurance and securities.