General Regulation

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Marketing Direct marketers

Information about banking or financial direct marketing

Published on December 3, 2014

The regulation of financial or banking product and service marketing is governed by a strict framework, notably regarding the conditions of sale by direct marketing and the status of the natural persons or legal entities authorised to conduct such direct marketing.

What is banking or financial direct marketing?

To enhance investor protection, the Monetary and Financial Code provides a legal framework for banking or financial direct marketing conditions. The AMF has supervision and enforcement powers over direct marketers.

Direct marketing is when…

Banking or financial direct marketing is when a person is contacted, without having requested it, by any means whatsoever (post, telephone, etc.), to propose:

  • a transaction in financial instruments (shares, bonds, SICAVs, etc.),
  • banking or related transactions (receiving funds from the public, credit operations, foreign exchange transactions, etc.),
  • investment or related services (order reception and transmission for third parties, discretionary asset management, financial instrument custody account keeping for third parties, etc.),
  • transactions in miscellaneous assets (subscription of annuities, etc.),
  • an investment advice service,
  • a payment service.

It is also banking or financial direct marketing, regardless of which party initiated the process (the direct marketer or the person contacted) if the contact between the parties occurs:

  • at the home of the person contacted, 
  • in their place of work, 
  • in any other place not intended for the marketing of financial products.

E.g. a person is approached when they are doing their shopping in a mall. This is direct marketing, in principle.

However, certain situations listed in Article L. 341-2 of the Monetary and Financial Code are not subject to application of the banking or financial direct marketing regime. For example, if a person is approached when they are queuing in a bank, this is not direct marketing.

Products not authorised for direct marketing

The following products may not be proposed by banking or financial direct marketing:

>products for which the maximum risk is not known at the time of subscription, or for which the risk of losses is greater than the amount of the initial financial contribution (except for products falling within the scope of normal hedging operations, as long as such products are offered only to legal entities),
>products not authorised for marketing on French territory in application of Article L. 151-2 of the Monetary and Financial Code,
>securitisation vehicles (OT),
>financial instruments not admitted to trading on regulated markets or on recognised foreign markets, with the exception of: 

  • shares or units in UCITS and certain AIFs (retail investment funds, private equity investment funds; funds of alternative funds, etc.), financial securities offered to the public after drafting an information document on the terms set out in Book IV Title I of the Monetary and Financial Code,
  • securities issued by the venture capital companies mentioned in Article 1-1 of Law n° 85-695 of 11 July 1985,
  • products proposed within the framework of the system set out in Part 3, Book III of the French Labour Code.

Concerning shares in SCPIs, they may be subject to direct marketing provided that the articles of association of the SCPI make provision for the limitation of the liability of each associate to the amount of their share in the capital.

Authorised direct marketers

To limit abuses, the status of the persons authorised to carry out banking or financial direct marketing is strictly defined by law. These natural persons or legal entities have the possibility to appoint one of their employees or to appoint a third party to contact potential clients.

The following are authorised to conduct direct marketing:

  • credit institutions (e.g. a bank) or financing companies,
  • e-money institutions,
  • payment institutions,
  • investment companies, 
  • companies managing collective investment, 
  • insurance companies, 
  • equivalent institutions authorised in another European Union Member State and authorised to operate on French territory, 
  • the French Treasury, 
  • the Banque de France,
  • the French postal service (La Poste), 
  • the Institut d'Emission des Départements d'Outre-Mer,
  • the Institut d'Emission d'Outre-mer, 
  • the Caisse des Dépôts et Consignations,
  • venture capital companies,
  • financial investment advisors,
  • intermediaries banking transactions and in payment services,
  • tied agents.

Within the framework of the employee investment plans they may set up for their employees, companies may also conduct banking or financial direct marketing.

Requirements to be a direct marketer

The mandate
The mandate mentioned in Article L. 341-4 of the Monetary and Financial Code specifies the name of the direct marketer. It lists the nature of the products and services covered and the terms on which the direct marketing activity may be conducted. A direct marketer may receive mandates from several companies. The mandate is valid for a two-year term and may be renewed.

To be entitled to conduct such activities, direct marketers must fulfil conditions of age, good repute and professional skills, as set out in the Monetary and Financial Code. They must also show their direct marketer card whenever they offer a banking or financial product or service in person in the field.

Removal of the file of direct marketers In application of the Law on Banking and Financial Regulation of 22 October 2010, the file of direct marketers held by the Banque de France on behalf of the AMF and ACPR disappeared on 1st January 2013. Consequently, there is no longer an obligation for direct marketers to be listed in that file as of 1st January 2013. However, direct marketers shall continue to be subject to the provisions that remain in effect, including the requirement to hold and present a direct marketing card notably when physically present at the domicile of the persons solicited, or at their place of work.

Any direct marketer working under a mandate, whether a natural person or legal entity, must:

  • take out a professional civil liability insurance policy providing the levels of cover set out in Article D. 341-3 of the Monetary and Financial Code, 
  • have signed a mandate.

All direct marketers, whether they are an employee of a person authorised to conduct direct marketing, appointed by a person authorised to conduct direct marketing or an employee of a person with a mandate, must hold a direct marketing card if they visit the homes of the persons they contact, their place of work or any other places not intended for marketing of the products in question. This card is issued by the person or entity on behalf of whom the direct marketer is acting.

Obligations of direct marketers & rights of persons contacted

In order to fulfil their mission and offer the persons they contact products, services or instruments that are adapted to their situation, direct marketers must comply with a certain number of obligations set out in the Monetary and Financial Code. The person contacted, meanwhile, has the benefit of a cooling-off period of 14 calendar days, under certain conditions.

Obligation of information

Article L. 341-11 of the Monetary and Financial Code places a dual obligation upon direct marketers:

  1. to obtain information about the financial situation of the person contacted, their experience and investment and financing objectives, 
  2. to provide clear, comprehensible information to the person contacted about the products and services being offered.

Obligation of transparency

Direct marketers must also provide the person contacted with their personal name and address and the same information about the legal entity or entities on behalf of which they are acting. They must also provide information documents about the products and services they offer, their terms and conditions and information about whether the client has the benefit of a cooling-off period or not.

Restrictions...

Sanctions applicable to direct marketers
Any direct marketer who does not comply with their obligations towards their client or those of their activity may be subject to:
> criminal sanctions – relating to the relations between the direct marketer and the persons contacted or to the status of direct marketer and the products and services proposed - (Articles L. 353-1 and following of the Monetary and Financial Code),
> disciplinary sanctions may be pronounced for any breach of the laws, regulations and professional obligations by the relevant Authority – the AMF or ACPR - (Article L. 341-17 of the Monetary and Financial Code).

It is prohibited for direct marketers to:

  • propose products, financial instruments or services other than those for which they have received express instructions from the person(s) on behalf of whom they are acting; 
  • sign contracts in the name of the person on behalf of whom they are acting; 
  • receive funds (cash, cheques, commercial paper, securities or any other form of payment) from the persons contacted;
  • Provide investment services.

Cooling-off period for the persons contacted

Any person contacted has a period of 14 days during which they may withdraw without any penalties and without having to justify their decision:

  • as of the day when the contract is signed, 
  • as of the day when the contacted person receives the contractual terms and information, if this comes after the signature of the contract.

For certain financial products (e.g. UCITS) or investment services (e.g. order reception-transmission), this cooling off period may not apply. However, in the event of any direct marketing proposing such products or services at the home of the person, in their place of work or in any places not intended for the marketing of financial products, instruments and services, the person contacted has a cooling-off period of 48 hours.

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Legal information
Head of publications: The Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02