Background

As part of a broader modernisation of the EU consumer financial services framework, new rules for financial services contracts concluded at a distance were adopted in November 2023 (Directive (EU) 2023/2673 (PDF, 673 KB)) (DMD II). The DMD II repeals the original Distance Marketing of Consumer Financial Services Directive (Directive 2002/65/EC) with effect from 19 June 2026. Rather than replacing it on a standalone basis, the DMD II integrates updated rules into the Consumer Rights Directive (2011/83/EU) (CRD).

Due to the specific nature of consumer financial services, it was not considered appropriate for all provisions of the CRD to apply to financial services contracts concluded at a distance; accordingly, a dedicated chapter has been added to the CRD containing rules applicable only to such contracts. In this regard, the new rules are effectively ring-fenced from the existing CRD provisions with limited exceptions such as the rules on additional payments, enforcement, inertia selling and reporting, which will also apply to distance marketing of financial services contracts.

The impetus for reform was twofold. Reviews of the original Directive revealed that the progressive introduction of EU sector-specific legislation had led to significant overlaps with it. At the same time, rapid technological developments brought significant changes to the financial services market, with digitalisation contributing to market developments that were not foreseen at the time of the original Directive’s adoption. The new rules maintain the “safety net” function of the original Directive, ensuring that a set of harmonised rules continues to apply to financial services not otherwise covered by EU sector-specific legislation.

Key changes

Pre-contractual information (PCI)

In good time before a consumer is bound by a distance contract, the trader must provide the consumer, in a clear and comprehensible manner, with a specified catalogue of pre-contractual information. Key new or updated requirements include the following:

• where applicable, information that the price was personalised on the basis of automated decision-making and information on the consequences of late or missed payments
• where environmental or social factors are integrated into the investment strategy of the financial service, information on any environmental or social objectives targeted
• all pre-contractual information must be provided on a durable medium, be easy to read, and must, upon request, be provided in an appropriate and accessible format for consumers with disabilities
• where pre-contractual information is provided less than one day before the consumer is bound by the distance contract, the trader must send a reminder of the right of withdrawal between one and seven days after conclusion of the contract

Except for certain key items of information (including the identity of the trader, main characteristics of the financial service, total price, notice of possible other taxes and the existence or absence of a right of withdrawal), the trader is permitted to layer the information where it is provided by electronic means, provided it is possible to view, save and print all PCI as a single document, and the trader ensures the consumer is presented with all PCI before the conclusion of the contract.

The DMD II clarifies that, where sector-specific EU legislation already governs pre-contractual information (for example, under MiFID II, the Insurance Distribution Directive, the PEPP Regulation or the Payment Accounts Directive), only those sector-specific rules will apply unless otherwise provided for in those acts.

Right of withdrawal

In general, the DMD II provides that a consumer has a period of 14 calendar days to withdraw from a distance contract without penalty and without giving any reason, extended to 30 calendar days for personal pension operations. Notably, where the consumer has not received the PCI and contractual terms, the withdrawal period will last until 12 months and 14 days after the contract date. However, this longstop date will not apply where the consumer has not been informed of their right of withdrawal, in which case the withdrawal period does not expire.

The withdrawal period commences after either the day of conclusion of the contract or the day the consumer receives both the PCI and the relevant terms and information – whichever is the later.

Where another EU act governing specific financial services contains rules on the right of withdrawal, only the rules of that EU act apply to those specific financial services, unless otherwise provided in that other EU act.

For distance contracts concluded via an online interface, the DMD II embeds the withdrawal function directly into the digital purchasing environment by requiring that a withdrawal function, prominently displayed and labelled “withdraw from contract here” (or equivalent formulation), must be continuously available throughout the withdrawal period. Under the DMD II, the aim is to ensure that withdrawal is at least as easy as contract conclusion. Notably, this new requirement applies not only to financial services contracts but to all distance contracts subject to a right of withdrawal under the CRD.

Adequate explanations and online fairness

Adequate explanations must be provided to the consumer, free of charge and prior to the conclusion of the contract, covering the pre-contractual information, the essential characteristics of the proposed contract and possible ancillary services, and the specific effects the proposed contract may have on the consumer.

Where online tools (e.g. chatbots/robo-advice) are used, consumers must be able to request and obtain human intervention at the pre-contractual stage (and in justified cases after contract conclusion), in the same language as that used for the pre-contractual information.

Provisions are also included to prevent the use of ‘dark patterns’ (practices materially distorting or impairing consumers’ ability to make free and informed decisions) and the DMD II imposes a minimum obligation on Member States to address at least one of the three specified dark pattern practices.  

Key dates and Irish state of play

Member States were required to publish transposing legislation by 19 December 2025 and to apply the new rules from 19 June 2026.

In Ireland, the Department of Finance (DoF) published an Outcome Statement (PDF, 1.39 MB) in October 2025 following a public consultation process, indicating that Ireland will not go beyond the minimum requirements in key areas such as language, pre-contractual information and dark patterns. Ireland has confirmed its intention to exercise its national discretion under Article 16b(7) of the DMD II such that: mortgage contracts exempt from the Mortgage Credit Directive but falling within the scope of the DMD II will be afforded the 30-day withdrawal period under the Mortgage Credit Directive; and credit agreements exempt from the Consumer Credit Directive but falling within the scope of the DMD II will be afforded the 14-day withdrawal period under the Consumer Credit Directive.

The DMD II is expected to be implemented primarily through amendments to the Consumer Protection Act 2022. Irish transposing measures have yet to be published, notwithstanding that the transposition deadline of 19 December 2025 has now passed. We are actively monitoring this area and will issue an update once transposing measures are available.

If you require further information, please contact a member of the Financial Regulation Group or your usual Arthur Cox contact.