ECO Electronic Commerce Directive

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Export part as

ECO 1

INCOMING
ECA PROVIDERS

ECO 1.1

Application and purpose

  • 01/12/2004

Application

ECO 1.1.1

handbook-rule

This chapter applies to an incoming ECA provider, with respect to:

  1. (1) the carrying on of an electronic commerce activity;
  2. (2) from an establishment in an EEA State other than the United Kingdom; and
  3. (3) with or for a UK ECA recipient.
  • 21/09/2002

ECO 1.1.2

handbook-guidance
ECO as a whole operates against the background of a key element of the E-Commerce Directive, namely the freedom of ECA provider from one EEA State to carry on an electronic commerce activity freely into another EEA State. An incoming ECA provider has to comply with the applicable laws in the country of origin from which the service is provided, and not the laws in the place where the consumer is located, subject to derogations from that principle. The applicable UK rules under those derogations are set out, or referred to, in this chapter.
  • 21/09/2002

ECO 1.1.3

handbook-guidance
This freedom is conferred on incoming ECA providers by the ECD Regulations, and is carried forward by this chapter and other provisions of the FSA's Handbook to which this chapter refers. However, this freedom is qualified by certain other rules in this chapter. These rules are based either on the 'consumer contract derogation' or on the 'insurance derogation', which give Host States continuing responsibility for consumer protection in certain areas. Both derogations are set out in the Annex to the directive.
  • 21/09/2002

ECO 1.1.4

handbook-guidance
This chapter applies only in relation to electronic commerce activities provided to a UK ECA recipient. ECO 1.2 (Provision of essential information to consumers) applies in relation to electronic commerce activities supplied to a UK ECA recipient who is a consumer. ECO 1.3 (Provision of insurance services) applies in relation to relevant services provided to a UK ECA recipient, whether or not the recipient is a consumer.
  • 21/09/2002

ECO 1.1.5

handbook-guidance
The E-Commerce Directive also allows the EEA State where the recipient is based to restrict the freedom to provide an electronic commerce activity from another EEA State on a case by case basis, where certain conditions are met. This derogation is implemented in the United Kingdom through provisions of the ECD Regulations. ENF 19 outlines the derogation power and the FSA's policy on its use in relation to incoming ECA providers.

Application of other parts of the Handbook

ECO 1.1.6

handbook-rule
Except for the provisions set out in ECO 1.1.10 R, the Handbook does not apply to an incoming ECA provider acting as such.
  • 01/11/2002

ECO 1.1.7

handbook-guidance
Notwithstanding the provisions of the E-Commerce Directive, an incoming ECA provider's Home State (when different from its country of origin) will continue to have certain responsibilities, such as prudential supervision of that provider and its branches and ensuring that it has the appropriate compensation scheme as required by Community law. As such, an incoming ECA provider, that is an authorised person, is subject to the relevant parts of the Handbook. This means that an incoming ECA provider that is an EEA branch of a UK firm is subject to, for example, IPRU and COMP continues to be relevant to its activities.
  • 21/09/2002

ECO 1.1.8

handbook-guidance
The FSA has a range of investigation and enforcement powers available to it where an incoming ECA provider appears to be in breach of rules to which it is subject under ECO 1. These include powers to seek injunctions (see ENF 6), to apply to a court for restitution (see ENF 9) and, in the case of authorised persons, to order restitution (see ENF 9) and take disciplinary action (see ENF 11 to ENF 13).

ECO 1.1.9

handbook-guidance
The market abuse regime and misleading statements and practices offences are not affected by the E-Commerce Directive. The FSA's enforcement powers in this regard are described in ENF 14 and ENF 15. The FSA's Code of Market Conduct (MAR 1) contains guidance on whether or not behaviour amounts to market abuse.

ECO 1.1.10

handbook-rule
Handbook provisions applicable to, or relevant for, incoming ECA providers. This Table belongs to ECO 1.1.6 R

ECO 1.2

Provision of essential information to consumers

  • 01/12/2004

Requirement to provide essential information

ECO 1.2.1

handbook-rule
Before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider must supply the recipient with essential information in English relevant to the contract.
  • 01/12/2004

ECO 1.2.2

handbook-guidance

ECO 1.2.1 R requires an incoming ECA provider to provide a consumer with essential information, as envisaged by the E-Commerce Directive. ECO 1.2.6 E and ECO 1.2.7 E suggest that an incoming ECA provider should meet this requirement in one of two ways:

  1. (1) ECO 1.2.6 E gives an incoming ECA provider the option of complying with relevant UK Host State requirements relating to the provision of essential information; or
  2. (2) alternatively, ECO 1.2.7 E allows an incoming ECA provider to comply with requirements imposed by its country of origin which correspond to those of the United Kingdom.
  • 21/09/2002

Exceptions: insurance

ECO 1.2.3

handbook-rule

ECO 1.2.1 R does not apply to an insurer with respect to insurance business, where the activity:

  1. (1) is carried on by an insurer which has received official authorisation in accordance with article 6 of the First Life Directive or the First Non-Life Directive; and
  2. (2) falls within the scope of the Insurance Directives;

but the insurer must instead comply with ECO 1.3.1 R.

  • 21/09/2002

Exceptions: deposits, and re-insurance

ECO 1.2.4

handbook-rule
  1. (1) ECO 1.2.1 R does not apply to an incoming ECA provider with respect to an electronic commerce activity relating to:
    1. (a) a deposit (other than a cash deposit ISA); or
    2. (b) (if ECO 1.2.3 R does not apply) or reinsurance contract;
  2. but, instead, the incoming ECA provider must comply with (2).
  3. (2) before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider must indicate to the recipient whether the contract falls within the jurisdiction of:
    1. (a) any dispute resolution scheme operating in the EEA; and
    2. (b) in the case of services within (1)(b), any compensation scheme operating in the EEA;
  4. and, if either or both of (a) and (b) apply, must identify each such scheme.

ECO 1.2.5

handbook-guidance
  1. (1) ECO 1.2.4 R (2)(b) does not require a deposit-taking incoming ECA provider to mention a deposit guarantee scheme, but its Home State will require it to do so in accordance with the Deposit Guarantee Directive.
  2. (2) ECO 1.2.4 R does not require an incoming ECA provider carrying on electronic commerce activities in relation to non-investment insurance contracts to mention a dispute resolution service or a compensation scheme, but its country of origin will require it to do so in accordance with the Distance Marketing Directive.

Exceptions: regulated mortgage contracts

ECO 1.2.5A

handbook-rule
ECO 1.2.1 R does not apply to an incoming ECA provider with respect to an electronic commerce activity which relates to a regulated mortgage contract.

Exception: activities (other than insurance) from EEA States which have implemented the DMD

ECO 1.2.5B

handbook-rule

ECO 1.2.1 R does not apply to an incoming ECA provider with respect to an electronic commerce activity, if the following conditions are satisfied:

  1. (1) the activity is not insurance business which:
    1. (a) satisfies the conditions in ECO 1.2.3 R; and
    2. (b) is carried on by an insurer; and
  2. (2) the EEA State from which the activity is provided has implemented the DMD with the result that the obligations provided for by the DMD are applied when the incoming ECA provider is carrying on the activity from an establishment in that State with a UK ECA recipient in the United Kingdom.
  • 01/12/2004

Provision of essential information to consumers: UK requirements

ECO 1.2.6

handbook-evidential-provisions
  1. (1) In order to comply with ECO 1.2.1 R, before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider should comply with the following UK requirements:
    1. (a) in every case where COB 6.2 (Provision of key features) or COB 6.4 (Product disclosure: special situations) would require the provision of key features, provide the information identified in the rules listed in ECO 1.2.9 E;
    2. (b) when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication, ECO 1.2.10 E and ECO 1.2.11 E (Essential information: specific non-real time financial promotions which are incoming electronic commerce communications);
    3. (c) when it communicates a direct offer financial promotion which is an incoming electronic commerce communication, provide the information identified in the rules listed in ECO 1.2.12 E; and
    4. (d) where relevant, ECO 1.2.13 E and ECO 1.2.14 E (Essential information: direct offer financial promotion of higher risk products).
  2. (2) The requirements in (1)(a) and (c) only apply to the extent that they would apply to a firm carrying on business from an establishment in the United Kingdom with or for the UK ECA recipient.
  3. (3) The requirements in (1)(b) apply subject to the exemptions in COB 3.2.5 R (exemptions) (but disregarding any exemption which applies purely because the promotion is an incoming electronic commerce communication).

Provision of essential information to consumers: country of origin requirements

ECO 1.2.7

handbook-evidential-provisions
If an incoming ECA provider engages in conduct which is in conformity with provisions:
  1. (1) corresponding to the UK requirements set out in ECO 1.2.6 E (1); and
  2. (2) made by a body or authority in an EEA State other than the United Kingdom;
that conduct is to be treated as conduct in conformity with those UK requirements.
  • 21/09/2002

Effect of compliance with ECO 1.2.6 E (UK requirements) or ECO 1.2.7 E (country of origin requirements)

ECO 1.2.8

handbook-evidential-provisions
  1. (1) Compliance with ECO 1.2.6 E (1), directly or through engaging in conduct as set out in ECO 1.2.7 E, may be relied on as tending to establish compliance with ECO 1.2.1 R.
  2. (2) Contravention of ECO 1.2.6 E (1) (including failure to engage in conduct as set out in ECO 1.2.7 E) may be relied on as tending to establish contravention of ECO 1.2.1 R.
  • 21/09/2002

ECO 1.2.9

handbook-evidential-provisions

Provision of essential information to consumers: key features. This table belongs to ECO 1.2.6 E (1)(a)

Provision of essential information to consumers: specific non-real time financial promotions which are incoming electronic commerce communications

ECO 1.2.10

handbook-evidential-provisions
An incoming ECA provider should ensure, when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication to a UK ECA recipient who is a consumer, that the financial promotion includes:
  1. (1) a description of:
    1. (a) the main features of the product or service;
    2. (b) the total price to be paid by the consumer under the contract, including all related fees, charges and expenses or, if this cannot be given, the basis for the calculation of the price;
    3. (c) any risks associated with the specific features of the contract; and
  2. (2) the name and address or contact point of the person with whom the consumer would enter into a contract.
  • 01/11/2002

ECO 1.2.11

handbook-evidential-provisions
An incoming ECA provider should ensure, when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication to a UK ECA recipient who is a consumer, that any essential information provided to the consumer about the past performance of specified investments or of a firm includes, where relevant to the contract, a statement to the effect that past performance should not be seen as an indication of future performance.
  • 01/11/2002

ECO 1.2.12

handbook-evidential-provisions

Provision of essential information to consumers in direct offer financial promotions. This Table belongs to ECO 1.2.6 E (1)(c)

  • 21/09/2002

Provision of essential information to consumers: direct offer financial promotion of higher risk products

ECO 1.2.13

handbook-evidential-provisions
  1. (1) An incoming ECA provider should ensure, when it communicates a direct offer financial promotion which is an incoming electronic commerce communication relating to:
    1. (a) an unregulated collective investment scheme; or
    2. (b) a derivative; or
    3. (c) a warrant; or
    4. (d) a broker fund;
  2. that the UK ECA recipient, if a consumer, is provided with the essential information set out in the table in ECO 1.2.14 E, in the case of an unregulated collective investment scheme, (2) in the case of a derivative, (3) in the case of a warrant and (4) in the case of a broker fund.
  3. (2) An incoming ECA provider should ensure that the essential information required by (1) is included in the direct offer financial promotion in a manner that will bring it to the attention of the consumer.
  • 01/11/2002

ECO 1.2.14

handbook-evidential-provisions

Provision of essential information to consumers: direct offer financial promotion of higher risk products. This table belongs to ECO 1.2.13 E

  • 21/09/2002

ECO 1.3

Provision of insurance services

  • 01/12/2004

ECO 1.3.1

handbook-rule

ECO 1.2.1 R (Requirement to provide essential information) does not apply to an insurer with respect to insurance business where the activity:

  1. (1) is carried out by an insurer which has received official authorisation in accordance with article 6 of the First Life Directive or the First Non-Life Directive; and
  2. (2) falls within the scope of the Insurance Directives;

but instead such an insurer must comply with the provisions of COB set out in the Table in ECO 1.3.3 R when it deals with a UK ECA recipient.

  • 21/09/2002

ECO 1.3.2

handbook-guidance
The insurance derogation set out in the Annex to the E-Commerce Directive allows the United Kingdom, as a Host State, to continue to apply its own local rules to an insurer, where the latter is providing an electronic commerce activity to a UK ECA recipient, in circumstances where these Host State rules fall within the scope of any of the Insurance Directives. Against this background, the FSA believes it is appropriate that certain of the requirements of COB 3 (Financial promotion) and COB 6 (Product disclosure and the customer's right to cancel or withdraw) should continue to apply to the provision of these services.
  • 21/09/2002

ECO 1.3.3

handbook-rule

Provision of insurance services. This table belongs to ECO 1.3.1 R

ECO 1.3.4

handbook-guidance
The COB rules set out in ECO 1.3.3 R do not include COB rules that implement mandatory provisions from the Insurance Directives, such as those provisions in Annex II to the Third Life Directive, as these fall outside the scope of the insurance derogation in the E-Commerce Directive and must be implemented by an incoming ECA provider's country of origin.
  • 21/09/2002

ECO 1.3.5

handbook-rule
Any information provided by an incoming ECA provider that is an insurer to a UK ECA recipient must be provided in English.
  • 21/09/2002

Export chapter as

ECO 2

OUTGOING
ECA PROVIDERS

ECO 2.1

Application and purpose

  • 01/12/2004

Application

ECO 2.1.1

handbook-rule

ECO 2 applies to:

  1. (1) an outgoing ECA provider; and
  2. (2) every firm in relation to a financial promotion which is an outgoing electronic commerce communication.
  • 01/11/2002

Purpose

ECO 2.1.2

handbook-guidance
  1. (1) The main purpose of this chapter is to implement the provisions of the E-Commerce Directive as these apply to firms regulated by the FSA.
  2. (2) The purpose of ECO 2.2 (Modification of the content and territorial scope of COB) is to ensure that:
    1. (a) an outgoing ECA provider; and
    2. (b) a firm, in relation to a financial promotion which is an outgoing electronic commerce communication;
  3. in complying with COB, is able to disregard any provision of COB which is included in the 'consumer contract derogation' or 'insurance derogation' (set out in the Annex to the E-Commerce Directive), when dealing with a consumer in another EEA State.
  4. (3) ECO 2.2 also extends the territorial scope of COB 3 (Financial promotion), ICOB 3 (Financial promotion) and MCOB 3 (Financial promotion) in relation to a financial promotion which is an outgoing electronic commerce communication, whether or not the recipient is a consumer.
  5. (4) ECO 2.3 (Minimum information requirements) imposes the information requirements of the E-Commerce Directive on firms when they carry on an electronic commerce activity with an EEA ECA recipient from a UK establishment, whether or not the recipient is a consumer. These requirements are in addition to the requirements otherwise applicable to firms when they carry on a regulated activity.

ECO 2.2

Modification of the content and territorial scope of COB

  • 01/12/2004

Lifting of rules included in the derogations

ECO 2.2.1

handbook-rule

In relation to:

  1. (1) an electronic commerce activity carried on from an establishment in the United Kingdom with or for an EEA ECA recipient who is a consumer; and
  2. (2) a financial promotion which is an outgoing electronic commerce communication made to or directed at a consumer;

a firm is not required to comply with any of the provisions mentioned in ECO 1.2.6 E 1(a) and (1)(c) (essential information) or, if it is an insurer carrying on insurance business falling within the scope of the Insurance Directives, ECO 1.3.3 R.

  • 22/09/2002

ECO 2.2.2

handbook-guidance

The provisions mentioned in ECO 1.2.6 E (1)(a) and ECO 1.2.6 E (1)(c) and ECO 1.3.3 R are those that the United Kingdom, as a Host State, applies to incoming ECA providers under the 'consumer contract derogation' and 'insurance derogation' respectively. A corollary of this approach is that these provisions are disapplied to:

  1. (1) an outgoing ECA provider when it provides electronic commerce activities to an EEA ECA recipient who is a consumer; and
  2. (2) a firm, in relation to a financial promotion which is an outgoing electronic commerce communication made to or directed at a consumer;

The provisions at ECO 1.2.6 E, ECO 1.2.6 E (1)(b) and ECO 1.2.6 E (1)(d) do not apply in these situations in any event.

  • 23/09/2002

Financial promotion

ECO 2.2.3

handbook-rule
  1. (1) In relation to a financial promotion which is an outgoing electronic commerce communication, a firm must comply with COB 3 (Financial promotion), ICOB 3 (Financial promotion) and MCOB 3 (Financial promotion) as if the person to whom the communication is made or directed was in the United Kingdom.
  2. (2) Accordingly, (1) overrides COB 3.3 (Application: where?), ICOB 3.4 (Application: where?) and MCOB 3.3 (Application: where?).
  3. (3) But (1) is subject to ECO 2.2.1 R, which disapplies certain COB rules applicable to incoming ECA providers when dealing with consumers.

ECO 2.2.4

handbook-guidance
The effect of ECO 2.2.3 R is to apply the whole of COB 3, ICOB 3 and MCOB 3, where relevant, to outgoing electronic commerce communications, except those provisions of COB 3, ICOB 3 and MCOB 3 identified in ECO 2.2.1 R. (See ECO 2.2.2 G for an explanation of this approach.)

ECO 2.3

Minimum information requirements

  • 01/12/2004

ECO 2.3.1

handbook-rule
When providing electronic commerce activities to an EEA ECA recipient, an outgoing ECA provider must comply with the requirements set out in ECO 3 Annex 1 R (1), (2) and, if it is a professional firm (or a person that is regulated by the equivalent of a designated professional body in an EEA State other than the United Kingdom), (3).
  • 24/09/2002

ECO 2.3.2

handbook-guidance

ECO 3 Annex 1 R implements provisions contained in the E-Commerce Directive, as follows:

  1. (1) ECO 3 Annex 1 R(1) implements articles 5 (except paragraph 1(f)), 6 and 10 of the directive; these provisions require certain information to be provided by an outgoing ECA provider before any contract is entered into;
  2. (2) ECO 3 Annex 1 R(2) implements article 11 of the directive, which relates to matters arising after the contract has been entered into; and
  3. (3) ECO 3 Annex 1 R(3) implements article 5.1(f) of the directive; these requirements apply where the outgoing ECA provider is a professional firm (or a person that is regulated by the equivalent of a designated professional body in an EEA State other than the United Kingdom); this Annex will therefore mainly be relevant to firms which are solicitors, accountants, or actuaries.
  • 24/09/2002

Export chapter as

ECO 3

DOMESTIC (AND NON-EEA) ECA PROVIDERS

ECO 3.1

Application and purpose

  • 01/12/2004

Application

ECO 3.1.1

handbook-rule
This chapter applies to a domestic ECA provider.
  • 24/09/2002

Purpose

ECO 3.1.2

handbook-guidance
The main purpose of this chapter is to implement the provisions of the E-Commerce Directive as these affect firms regulated by the FSA. In particular, this chapter imposes the information requirements of the E-Commerce Directive on firms when they carry on an electronic commerce activity with an ECA recipient who is in the United Kingdom or located outside the EEA. These requirements are in addition to the requirements otherwise applicable to firms when they carry on a regulated activity.
  • 24/09/2002

ECO 3.1.3

handbook-guidance
Accordingly, ECO 3.2.1 R requires a domestic ECA provider to supply minimum information to an ECA recipient regardless of the recipient's location.
  • 24/09/2002

ECO 3.2

Minimum information requirements

  • 01/12/2004

ECO 3.2.1

handbook-rule
In relation to an electronic commerce activity carried on from an establishment in the United Kingdom with or for a UK ECA recipient, or an ECA recipient in a non-EEA State, a domestic ECA provider must comply with the requirements set out in ECO 3 Annex 1 R (1), (2) and, if it is a professional firm (or a person that is regulated by the equivalent of a designated professional body in an EEA State other than the United Kingdom), (3).
  • 24/09/2002

ECO 3.2.2

handbook-guidance

ECO 3 Annex 1 R implements provisions contained in the E-Commerce Directive as follows:

  1. (1) ECO 3 Annex 1 RR(1) implements articles 5 (except paragraph 1(f)), 6 and 10 of the directive; these provisions require certain information to be provided by a domestic ECA provider before any contract is entered into;
  2. (2) ECO 3 Annex 1 RR(2) implements article 11 of the directive, which relate to matters arising after the contract has been entered into; and
  3. (3) ECO 3 Annex 1 RR(3) implements article 5.1(f) of the directive; these requirements apply where a domestic ECA provider is a professional firm (or a person that is regulated by the equivalent of a designated professional body in an EEA State other than the United Kingdom); this annex is therefore mainly relevant to firms which are solicitors, accountants, and actuaries.
  • 24/09/2002

ECO 3.2.3

handbook-guidance
In contrast to an outgoing ECA provider (see ECO 2.2.1 R), a domestic ECA provider is not relieved of the obligation to comply with the COB requirements specified in ECO 1.2.6 E, or, in the case of an insurer, ECO 1.3.3 R. A domestic ECA provider must therefore comply with COB in full, as well as the provisions set out in ECO 3.2.1 R.
  • 24/09/2002

ECO 3 Annex 1

E-Commerce Directive: Minimum Information Requirements

  • 01/12/2004

handbook-rule
  • 01/03/2003

Export chapter as

Transitional Provisions and Schedules

ECO TP 1

Transitional Provisions

ECO TP 1.1

ECO Sch 1

Record keeping requirements

  • 01/12/2004

ECO Sch 1.1

handbook-guidance
  • 01/12/2004

ECO Sch 2

Notification requirements

  • 01/12/2004

ECO Sch 2.1

handbook-guidance
  • 01/12/2004

ECO Sch 3

Fees and other required payments

  • 01/12/2004

ECO Sch 3.1

handbook-guidance
  • 01/12/2004

ECO Sch 4

Powers exercised

  • 01/12/2004

ECO Sch 4.1

handbook-guidance
  • 01/12/2004

ECO Sch 5

Rights of action for damages

  • 01/12/2004

ECO Sch 5.1

handbook-guidance
  • 01/12/2004

ECO Sch 5.2

handbook-guidance
  • 01/12/2004

ECO Sch 6

Rules that can be waived

  • 01/12/2004

ECO Sch 6.1

handbook-guidance
  • 01/12/2004

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