FPCOB 5 Annex 1 Guidance on the Distance Marketing Provisions

Q1. What is a distance contract?

To be a distance contract, a contract must be concluded under an ‘organised distance sales or service-provision scheme’ run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or otherwise) of one or more means of distance communication up to and including the time at which the contract is concluded.

So:

• the firm must have put in place facilities designed to enable a consumer to deal with it exclusively at a distance; and

• there must have been no simultaneous physical presence of the firm and the consumer throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the internet, through a telemarketing operation or by post, will normally be distance contracts.

Q2. What about a firm that normally operates face-to-face but occasionally uses distance means?

If a firm normally operates face-to-face and has no facilities in place enabling a consumer to deal with it customarily by distance means, there will be no distance contract. A one-off transaction effected exclusively by distance means to meet a particular contingency or emergency will not be a distance contract.

Q3. What is meant by ‘simultaneous physical presence’?

A consumer may visit the firm’s local office in the course of the offer, negotiation or conclusion of a contract. Wherever, in the literal sense, there has been ‘simultaneous physical presence’ of the firm and the consumer at the time of such a visit, any ensuing contract will not be a distance contract.

Q4. Does the mere fact that an intermediary is involved make the sale of a product or service a distance contract?

No.

Q5. When is a contract concluded?

A contract is concluded when an offer to be bound by it has been accepted. An offer in the course of negotiations (for example, an offer by a funeral plan provider to consider an application) is not an offer to be bound, but is part of a pre-contractual negotiation.

A consumer will provide all the information a funeral plan provider needs to decide whether to offer a plan and to calculate the price of the plan. The consumer may do this orally or in writing. The response by a funeral plan provider, giving a quotation to the consumer specifying the price of the plan and the terms, is likely to amount to an offer of the terms on which the funeral plan provider will provide the plan. Agreement by the consumer to those terms is likely to be an acceptance which concludes the contract.

Q6. How do these provisions apply to funeral plan intermediaries’ services?

The FCA anticipates that the provisions relating to distance marketing are likely to apply to funeral plan intermediaries’ services only in those cases where:

(a) the firm concludes a distance contract with a consumer covering its funeral plan distribution which is additional to any funeral plan contract which it is marketing; and

(b) that distance contract is concluded other than merely as a stage in the entering into of a funeral plan contract by the firm or another person: in other words, it has some continuity independent of a funeral plan contract, as opposed, for example, to being concluded as part of marketing a funeral plan contract.

Q7. Can you give examples of when the distance marketing provisions would and would not apply to funeral plan intermediaries’ services?

The rules in this section are unlikely to apply in the typical case where a funeral plan intermediary sells a funeral plan contract to a consumer on a one-off basis.

Nor will the rules apply if a funeral plan intermediary, in its terms of business, makes clear that it does not, in conducting funeral plan distribution, act contractually on behalf of, or for, the consumer.

An example of when the provisions in this section would apply would be a distance contract under which a funeral plan intermediary agrees to provide advice to a consumer on funeral plan contracts.