Today, the European parliament’s committee on the internal market and consumer protection endorsed a proposal to update consumer protection rules when concluding distance contracts for financial services.

While the so-called ‘Distance Marketing of Financial Services Directive’ contains concrete improvements – brought about by the relentless efforts of the S&D Group – it lacks an important measure to protect consumers against the abusive practices of social media influencers.

Compared to the Commission’s proposal, the S&Ds have successfully secured a number of elements to increase the protection of consumers, including the withdrawal feature for all distance contracts concluded by digital means, and a prohibition of dark patterns when financial services are offered online. Moreover, ads on financial services will have to display the risk of losing money or the fact that borrowing money has a cost.

However, we deeply regret that right wing MEPs rejected our amendment to counter the role of “finfluencers”, that is to say to prohibit the marketing of dangerous financial products by social media influencers. Such practice is growing and poses serious risks of misleading consumers, particularly young people, who end up relying more on the popularity of the influencer than on the risks associated with the promoted financial product.

Maria Manuel Leitão Marques, S&D negotiator on the file, said:

“The proposal includes positive elements to ensure better consumer protection when contracting financial services online. However, it is a shame that the right-leaning part of this house massively refused to regulate the financial services marketing of social media influencers, which in the past has caused grave harm to consumers. We do not want to see a repeat of what we saw with cryptocurrencies or other cases in the last few years.”

S&D spokesperson on the internal market and consumer protection, Christel Schaldemose, said:

“Improving online consumer protection is key to the S&D Group. On the one hand, I therefore welcome the prohibition of dark patterns, the additional information on advertising and the withdrawal feature. On the other hand, I regret that right wing groups rejected stronger protection against the marketing of risky financial products by social media influencers. These practices are not only dangerous for young consumers, but also harmful in the context of crisis. Therefore, we will continue to push for stronger protection on this issue.”