Payment systems in Italy
(By Associazione Consumatori Piemonte )

MEANS OF PAYMENT AND FINANCIAL SERVICES AT DISTANCE:

FOR A COMPLETE REGULATION OF NEW TECHNOLOGIES FOR CONSUMERS AND PROBLEMS OF SECURITY AND FRAUD.

The development of distance communication techniques (above all, the Internet), the easy and cheap access to financial products and their essentially immaterial nature, matching the Internet’s, are some factors contributing to the diffusion of distance contracting in financial instruments and investment services.
EU has been aware for the last years of the increasing frequency and relevance of distance trading of financial services.
The Statement 2001/0066 of the Commission to the Council and European Parliament reads that EU goals involve an integrated European market of financial services, to be made through the Financial Services Action Plan.

After adopting a Directive about e-commerce (2000/31/CE), a general one aiming to ensuring the freedom of all the services of the “information society” within the Union, EU now aims to applying e-commerce principles to financial services too.
In order to consolidate the Inner Market, to increase consumers’ defence for these services and to even national norms regarding them, EU recently adopted the Directive 2202/65/E, regarding distance trading of financial services for consumers.

By the act # 306 of 31/10/2003 (published in 15.11.03 # 266), the Italian Parliament delegated the Cabinet to pass a Legislative Decree for actuating that Directive. The Cabinet has been granted 18 months since the Act was passed, to pass its regulation.
After briefly analysing EU Directive, we will focus to some sector regulations presently in force in Italy – particularly, distance advertising and trading of investment services and financial products, as well as distance paying methods, such as Internet Banking.

1. EU Directive 2002/65/E
This Directive aims to regulate selling to consumers of “any bank or insurance financial service, or individual investment or paying service for retirees”, signed through a “distance communication technique” – that is, any means which can be used for commercialising a services between parties not finding themselves in the same place.
EU Lawmakers set the obligation to provide timely the Consumer, before the contract is signed, with a comprehensive information regarding:
- the Supplier – that is, the one who supplies the distance service within his/her business or professional activity;
- the Financial Service, its main features, total price, any additional cost;
- the Contract, the existence of a right to sign off or not, its minimal duration;
- whether it is possible to file suit about the contract, as well as non-judicial proceedings for consumers, and, if any, the way consumers can use them (art. 3 par. 1).
According to the Directive, such an information must be clear and understandable, by any means appropriated to the used communication technique (art. 3 par. 2). They must be sent also on paper (or other enduring support) in any case, along with general contracting conditions, before the consumer gets bound (art. 5 par. 1). Tighter national regulations regarding additional requirements and preliminary information are made safe, if they are compatible with EU law (art. 4 par. 1 e 2).

As for the right to sign off, the Directive obliges Member States to allow the consumer 14 days to break free from the agreement without any additional fee and without any reason to be given for this; such a deadline is delayed to 30 days for contracts regarding life insurance and for some agreements about individual retiring assistance.
Moreover, it is mandatory for the Consumer to pay only for the financial service. The price for this must never be as high as an additional fee (art. 7 par. 1).
As for proceedings, the Directive charges each Member State with promoting the institution of effective extrajudicial proceedings for plaints and dispute resolution (art. 14 par. 1).
Member States can also require that the burden of proof be on the provider as to mandatory information, contract signing and contract carrying. According to Directive 93/13/CEE of 5/4/1993 (regarding abusive clauses in consumers’ contracts), any clause setting on the consumer the burden of proof as to the provider’s obligations is abusive.

2.
As the actuating Decree of EU Directive is yet to appear, we will focus here on the present Italian regulation of distance signing of contracts financial services, as well as of some distance payment techniques.

2.1. Distance advertising and selling of investment services and financial products
In the Italian system, financial products can be advertised and sold at distance.
Art. 32 of the General Financial Regulation (hereinafter, TUF) defines distance-signed contracts as those signed by contacting customers in different ways than advertising, without simultaneous presence of both contracting parties.
This definition matches the one of art. 1.d D.Lgs. 185/99 about distance contracting. The only difference is that art. 32 gives no examples.
Such a similarity between the two texts makes Attachment 1 of D.Lgs. 185/99 apply to TUF, thus defining as distance communication techniques also leaflets and brochures – with address or not –, circular letters, catalogues, phoning with or without operator, radio, videophone, email, television, etc.
CONSOB (Stock Market and Companies Supervising Board), by its Statement of 7/7/1999 (n. DI/99052838) specified that Internet sites and email are distance communications techniques.
In this statement, CONSOB made a distinction between using email and Internet sites. In the former case, there is distance advertising and/or selling when the message is sent to an investor residing in Italy, regardless of where is the server provider the investor’s mailbox finds itself in. In the latter, CONSOB stated that the Italian regulation is applicable only if the site can be seen as addressed to Italian investors – some criteria are laid to determine it.
Regulating of distance contracting is committed by art. 32 TUF to CONSOB. After hearing Italian National Bank, CONSOB can issue regulations about that, provided these are in accord to art. 30 TUF (regarding offers off selling places).
Art. 30 of TUF regulates advertising and selling to the public of financial instruments and investment services in a different place than the seller’s, his/her dependants’, or his/her mediators’. For offers in such places, art. 31 requires the offer be made through financial promoters.
A special attention must be devoted to art. 30/6 TUF. This lays that the effects of contracts signed at distance are suspended for 7 days since the investor signed. This can sign off within this deadline without any cost or refunding. This also applies to contract offers made off-seat or at distance.
Of course, signing off is all about signed contracts, whilst “offer” regards the phase before signing. Doctrine has tried to bridge the gap between the two definitions – it has been maintained that, if the investor accepts an off-seat offer, the contract is signed even if the acceptance is made through signing a offer from the mediator.
During the 7-days suspension of the contract’s effects, the parties would be bound to one another by a contractual relationship with no juridical effects, except that the investor holds a subjective right the other party is subdued to.

CONSOB starter from this regulation to set some more rules concerning distance contracting. These lie in Book 4 (arts. 71 to 77 of Regulation # 11522/1998, actuating TUF).
Art. 72 defines the concepts of “distance communication technique”, laid by art. 32 TUF. Such techniques are those allowing to establish a contact with single investors with a chance of dialogue and quick interaction – or even without the latter, when sent messages have a contractual nature and do not merely depict qualities and features of the offering parties and the offered services.
The Regulation also sets an obligation to act through financial mediators only if the contracting “allows an individualised communication and a direct interaction with the investor” (art. 76/1 of the Regulation), provided the promotion does not take place on the investor’s initiative, and such an initiative hasn’t been provoked through messages sent to him or her individually (art. 76/2 of the Regulation).
CONSOB, by its Statement # DI/99052838 specified that the obligation to act through financial mediators only exists if promoting and selling are carried out by sending contractual proposals by email, and not also by an Internet site.
Art. 74 adds that “promoting and selling through distance communication techniques can’t take place (and, if started, must be aborted immediately) towards investors that shall declare themselves against them”.
Art. 75 adapts formal rules by TUF to the specificities of the means used. Paragraph 2 reads that “information owed to the investors must be provided clearly and understandably, suitably to the chosen distance communication technique”. According to paragraph 3, “the documents the seller must provide the investor with can be sent to him or her even through distance communication techniques”, provided these allow the investor to hold the documents on a permanent support.

2.2. Distance paying methods and Internet Banking
The subject of distance paying methods is a part of the Remote Banking system. This refers to every way of access to banking services which doesn’t require going to the Bank itself – among them, self banking (e.g., cash dispensers), phone banking, personal computer banking (either through the Internet or dedicated lines).
As a specific regulation does not exist (yet), banking contracts made in these ways are still regulated by general banking law (“TUB”, in the Legislative Decree 385/93, Italy’s only extensive regulation concerning banking). Art. 117 obliges to make banking contracts in a written way, under penalty of inefficacity, unless the Interministerial Committee for Banking and Saving allows a different ways for relevant technical reasons.
Doctrine (among others, Salzana di Sant'Ippolito, "I contratti bancari a distanza", 1-2 2001) noted that, as the Interministerial Committee didn’t say anything about this, art. 161 TUB would apply, extending to our case the Treasury’s Decree of 14/4/92, and thus derogating to the obligation of a written contract, when the agreement is about operations and services already described in written forms.
This brings doctrine to say that Internet Banking Contract, when it can be seen as the application of contract signed between Bank and customer, can be made in any way.
On the other hand, such observations could lose their meaning, as Legislative Decree 445/00 gives to a computer document the same relevance of a paper document, and it is possible to sign a contract through the Internet by a digital signature.
It is to be hoped that actuating EU Directive 2000/65 will fill the gaps and doubts of Italy’s present regulation, thus ensuring a reliable and coherent discipline for a steadily expanding and increasingly relevant sector.