• What is banking or financial promotion?
• Prohibited products and services
• Persons authorised to engage in banking or financial promotion
• Obligations of direct marketers
  • The direct marketers card
• Your rights when you are contacted by a direct marketer
• Things to do if you are contacted by a direct marketer

 

To strengthen investor protection, the Financial Security Act (2003-706, 1 August 2003) (in French) introduced stricter regulations governing the promotion and marketing of financial or banking products. The Act defines more precisely:

• how such products may be sold
• the status of natural or legal persons authorised to engage in promotional activities
• the obligations of direct marketers

• What is banking or financial promotion?

Banking or financial promotion is when a person contacts you, by whatever means, and proposes any of the following:

• transactions in financial instruments (e.g. stocks, bonds, shares in collective investment schemes, derivatives, etc.)
• banking or ancillary transactions (e.g. foreign exchange, transaction on gold, advice or assistance on managed investments, etc.)
• investment services or ancillary services (e.g. receiving and transmitting orders, trading for third parties, asset management, etc.)
• transactions in miscellaneous assets (e.g. life annuity, etc.)
• investment advice

The contact may be made by any means (personal visit, mail, e-mail, phone call), at your home, place of work or in any other place not intended for the marketing of financial products or services.

For example, if you are approached at a shopping mall, this constitutes a direct marketing approach. But if someone offers to sell you one of these products while you are in a bank, it does not.

Likewise, if you get a letter, e-mail or phone call from a bank where you are not a customer, this is a direct marketing approach. But that is not the case if you receive a proposal from your own bank by mail, e-mail or phone – unless the products or services being offered are unlike those you usually buy or use (in terms of their characteristics, risks or amounts).

•Prohibited products and services

Not all banking or financial products and services may be promoted or directly marketed. Products that may not be marketed directly include:

• Products for which the maximum risk is unknown at the time of the subscription or for which the risk of loss exceeds the initial investment, for example, certain derivatives transations (with exceptions);
• Products that are not eligible for marketing in France; and,
• Financial instruments that are not admitted to trading in regulated markets or in recognised foreign markets, for example, products listed on the NASDAQ, with the exception of securities offered to the public and covered by a prospectus authorised by the AMF and collective investment schemes.

For example, units in collective investment schemes may be sold directly, but securitisation fund units may not.

• Persons authorised to engage in banking or financial promotion

• The following institutions:

• Credit institutions (e.g. banks)
• Investment companies (e.g. asset management companies and brokerages)
• Insurance companies
• Banque de France
• The financial departments of the French postal service ( La Poste)
• Institut d'Emission des Départements d'Outre-Mer
• Institut d'Emission d'Outre-Mer
• Caisse des Dépôts et Consignations ;
• Venture capital firms (only for the products they issue)
• Financial
• Comparable institutions authorised by another EU Member State and permitted to do business in France

• The employees of these institutions

The institutions listed above can designate employees to act as direct marketers.

• Other persons and entities commissioned by these institutions, and the employees of these commissioned entities

The institutions listed above can also give mandate to natural or legal persons (legal persons can, in turn, commission natural persons) to engage in banking or financial promotion on their behalf.

What is a mandate? What purpose does it serve?

A mandate is an agency agreement by which a company authorises a natural or legal person to directly market certain banking or financial products. The mandate is issued to a specified person and is not transferable. A mandate for a legal person is issued in the name of the entity and not its employees. The mandate specifies the kinds of products and services that the direct marketer is authorised to offer you and the conditions under which he or she may do this. A direct marketer may be commissioned by several companies. Mandates are valid for two years and may be renewed.

• Obligations of direct marketers

The person who contacts you must:

hold a direct marketer's card

A direct marketer who offers a banking or financial product or service by coming to your home or place of work or by approaching you in a location not intended for the marketing of such products or services must hold a direct marketer's card. This card is issued by the company on whose behalf the direct marketer is acting. It gives the following information:

• The direct marketer's last name, first name, business address, photo and signature
• The name and registered office address of the legal person on whose behalf the direct marketer is acting
• The signature of an authorised representative of the legal person on whose behalf the direct marketer is acting
• The kinds of transactions and services that the direct marketer is authorised to offer you
• The card's expiry date

No other information may appear on the card.

This card is valid for two years, unless the direct marketer is an employee of the legal person authorised to engage in banking or financial promotion (see above), in which case it is valid for three years.

This card must be shown whenever the direct marketer contacts someone.

• In addition, direct marketers have two disclosure obligations. They must:

• obtain information about your financial situation, your experience and your investment or financing objectives and
• give you clearly presented and understandable information about the products or services they are offering

They must also communicate the following in writing:

• Their name, business address and registration number
  
• The name and address of the legal person(s) on whose behalf they are acting
  
• The name and address of the legal person(s) on whose behalf they are acting
  
• How the contract will be concluded and, in particular, where and when the contract will be signed. A direct marketer does not in fact have the right to sign the contract. A meeting must therefore be arranged between you and the company represented by the direct marketer so that the contract can be signed.
  
• Whether or not you have a right of withdrawal and, if so, how you can exercise it

Direct marketers may not, however:

• offer products, financial instruments or services other than those that they have been commissioned to sell; these are listed on their registration card; or
  
• sign a contract in the name and on behalf of the legal person on whose behalf they are acting

They are also forbidden to ask you for money (cash, cheques or any other means of payment).

• Your rights when you are contacted by a direct marketer

• A 14-day withdrawal period:

  You have a 14-day period beginning on the day you receive the contract signed by you and the company to withdraw from the agreement without penalty and without giving a reason for your decision.

When you exercise this withdrawal right, you have no obligation to pay fees or commissions of any kind. However, you must pay any amounts owed for using the product or service between the date the contract was signed and the date you exercised your withdrawal right.

Contracts for custody or administration of financial instruments and asset management for third parties are not performed during the withdrawal period.

• A 48-hour cooling-off period:

  For some financial products or services (e.g. collective investment funds, receiving/transmitting/executing orders for third parties), there is no withdrawal period. Instead, you have a 48-hour cooling-off period.

  The date on which you have to make a commitment is thus moved back by two days so that you can think over your decision.

  The date on which you have to make a commitment is thus moved back by two days so that you can think over your decision.

  For example: if you receive the documentation on Saturday, the cooling-off period begins on the following Monday (unless the Monday is a holiday, in which case it begins on Tuesday).

  The contract may not be executed until this period is over and until you have given your consent. Once this 48-period is over and you have consented, you can no longer withdraw from the agreement.

  For example: suppose you are contacted on a Saturday and offered the possibility to buy shares in company X. The buy order cannot be placed until Wednesday, and then, only after you have given your agreement.

•Things to do if you are contacted by a direct marketer

The direct marketer has obligations and you have rights. Nevertheless, to invest safely, you should respect some basic precautionary rules of caution.

• When you are contacted:
  
  • Make sure that the individual who is contacting you is an authorised direct marketer by asking for its card (if he or she has not shown it already). Remember to check the card's expiry date.
    
  • Make sure that the product you are being offered is authorised for marketing. A "Warnings" page that lists unauthorised or illegal products and services is available to help you do this.
    
• Note the person's address, phone number and registration number. You will then be able to contact him or she if you have questions and also check that they are actually authorised to market the products or services in question.
  
• Ask for an explanation of anything you do not understand. You are perfectly entitled not to be an expert. In any case, direct marketers are obliged to give you clearly presented and understandable information about the products or services they are offering.
  
• If the person does not spontaneously give you the documentation on the products or services in question (as required by law), then ask for it (see above).
  
• Get written confirmation of the place, date and time of the meeting that has been scheduled to sign the contract.
  
• Also get written confirmation of your rights; i.e. is it a right of withdrawal or a cooling-off period?
  
• And most important, do not sign any paper or pay any money (cash, check, credit card number, etc.) on the day that you are contacted.


• Once the direct marketer has left:
  
  
• Read carefully the literature he or she has given you (prospectuses, brochures, contracts, etc.).
  
• If there are things that you do not understand, contact the direct marketer or the company he or she represent to ask for clarifications.
  
• If you have not made up your mind, give yourself time to re-read the documentation and think over your decision.
  
• When you sign, you are making a commitment. Be well informed and think over your decision before signing.
  
  
• Once the contract is concluded:

If you notice a problem concerning the information you have been given, the execution of an order (time required, content), etc., contact the company with which you have signed the contract. The direct marketer will be of no help to you.

If you are not satisfied with the response that you receive, write to the company in question and tell them you are dissatisfied.

If the dispute remains unsettled, you can contact the AMF Ombudsman, who can provide mediation services.

 

To find out more:

• Monetary and Financial Code (articles L. 341-1 à L. 341-17, L. 342-1 à L. 342-3, L.353-1 à L. 353-4 )
• Decree of 2004-1019 of 28 September 2004 concerning banking or financial promotion (in French)
• Decree of 2004-1018 of 28 September 2004 concerning direct marketer registration (in French)
• Order of 28 September 2004 concerning the banking or financial direct marketer's card (in French).

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Update : 25 February 2013