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ECO 1.1 Application and purpose


ECO 1.1.1R

This chapter applies to an incoming ECA provider, with respect to:

  1. (1)

    the carrying on of an electronic commerce activity;

  2. (2)

    from an establishment in an EEA State other than the United Kingdom; and

  3. (3)

    with or for a UK ECA recipient.

ECO 1.1.2G

ECO as a whole operates against the background of a key element of the E-Commerce Directive, namely the freedom of ECA provider from one EEA State to carry on an electronic commerce activity freely into another EEA State. An incoming ECA provider has to comply with the applicable laws in the country of origin from which the service is provided, and not the laws in the place where the consumer is located, subject to derogations from that principle. The applicable UK rules under those derogations are set out, or referred to, in this chapter.

ECO 1.1.3G

This freedom is conferred on incoming ECA providers by the ECD Regulations, and is carried forward by this chapter and other provisions of the FSA's Handbook to which this chapter refers. However, this freedom is qualified by certain other rules in this chapter. These rules are based either on the 'consumer contract derogation' or on the 'insurance derogation', which give Host States continuing responsibility for consumer protection in certain areas. Both derogations are set out in the Annex to the directive.

ECO 1.1.4G

This chapter applies only in relation to electronic commerce activities provided to a UK ECA recipient. ECO 1.2 (Provision of essential information to consumers) applies in relation to electronic commerce activities supplied to a UK ECA recipient who is a consumer. ECO 1.3 (Provision of insurance services) applies in relation to relevant services provided to a UK ECA recipient, whether or not the recipient is a consumer.

ECO 1.1.5G

The E-Commerce Directive also allows the EEA State where the recipient is based to restrict the freedom to provide an electronic commerce activity from another EEA State on a case by case basis, where certain conditions are met. This derogation is implemented in the United Kingdom through provisions of the ECD Regulations. ENF 19 outlines the derogation power and the FSA's policy on its use in relation to incoming ECA providers.

Application of other parts of the Handbook

ECO 1.1.6R

Except for the provisions set out in ECO 1.1.10 R, the Handbook does not apply to an incoming ECA provideracting as such.1

ECO 1.1.7G

Notwithstanding the provisions of the E-Commerce Directive, an incoming ECA provider's Home State (when different from its country of origin) will continue to have certain responsibilities, such as prudential supervision of that provider and its branches and ensuring that it has the appropriate compensation scheme as required by Community law. As such, an incoming ECA provider, that is an authorised person, is subject to the relevant parts of the Handbook. This means that an incoming ECA provider that is an EEA branch of a UK firm is subject to, for example, IPRU and COMP continues to be relevant to its activities.

ECO 1.1.8G

The FSA has a range of investigation and enforcement powers available to it where an incoming ECA provider appears to be in breach of rules to which it is subject under ECO 1. These include powers to seek injunctions (see ENF 6), to apply to a court for restitution (see ENF 9) and, in the case of authorised persons, to order restitution (see ENF 9) and take disciplinary action (see ENF 11 to ENF 13).

ECO 1.1.9G

The market abuse regime and misleading statements and practices offences are not affected by the E-Commerce Directive. The FSA's enforcement powers in this regard are described in ENF 14 and ENF 15. The FSA's Code of Market Conduct (MAR 1) contains guidance on whether or not behaviour amounts to market abuse.

ECO 1.1.10R

Handbook provisions applicable to, or relevant for, incoming ECA providers. This Table belongs to ECO 1.1.6 R2




E-Commerce Directive sourcebook


The Code of Market Conduct

DEC (if the incoming ECA provider is authorised)

Decision making by the FSA

AUTH 1.2.6 G, AUTH 2.4.3 G, AUTH 2.4.7 G, AUTH 2.8.2 G - AUTH 2.8.15 G, AUTH 2.9.1 G, AUTH 2.9.18 G3 333

Authorisation guidance


Enforcement guidance


Interpreting the Handbook


Complaints against the FSA


Waivers and modification of rules


Individual guidance

SUP 13A.1.1 G - SUP 13A.1.2 G, SUP 13A.6.5 G, SUP 13A Annex 1 G3

Authorisation guidance3

SUP 14 (if the incoming ECA provider is authorised)

EEA firms change of details

Any reference in SUP 8 to a firm should be taken to include a reference to an unauthorised incoming ECA provider.2