Change to the Right of Withdrawal in the Financial Services Sector

On December 19, 2025, the Bundestag passed the Act Amending Consumer Contract and Insurance Contract Law as well as Medical Treatment Contract Law. The key provisions will take effect on June 19, 2026.

The Act implements various EU directives and aims to ensure a uniform and high level of consumer protection within the EU internal market. In particular, it regulates the (partial) restriction of the so-called perpetual right of withdrawal for financial services, as well as the introduction of an electronic withdrawal function for online contracts. Furthermore, the model withdrawal policy is being eliminated.

Below, we outline selected changes and highlight the resulting implications that financial service providers should consider in the future: 

I. Restriction of the so-called perpetual right of withdrawal for consumer contracts regarding financial services

Under the previous legal framework, a consumer could have an indefinite right of withdrawal if the financial services provider had not properly fulfilled its information obligations under Article 246b § 2(1) EGBGB (§ 356(3) BGB, old version).

The revised version of § 356(3) and (4) BGB seeks to limit this risk. In the future, the right of withdrawal will expire, even in distance contracts for financial services, no later than 12 months and 14 days after the date specified in § 356(2) BGB or § 355(2), sentence 2, BGB. This date is generally the conclusion of the contract, even if the financial services provider has not fully complied with its duty to provide information. 

However, a perpetual right of withdrawal may still arise if the consumer has not been informed of their right of withdrawal and the procedures for exercising it in accordance with Article 246b § 1(1)(16) of the Introductory Act to the German Civil Code (EGBGB), meaning the business operator has not properly instructed the consumer regarding the right of withdrawal. 

II. Introduction of an electronic withdrawal function (so-called “withdrawal button”)

Section 356a(1) of the German Civil Code (BGB) introduces a mandatory electronic withdrawal option. 

Businesses that enter into distance contracts via an online user interface must provide consumers with an easily accessible, consistently available, and user-friendly electronic option to cancel the contract. Canceling the contract must be just as easy as entering into it. The cancellation option must be clearly labeled with “Cancel Contract” or another equally unambiguous phrase.

The responsibility lies with the company as the consumer’s contractual partner, even in cases where the contract is concluded through third-party providers (intermediary platforms). The company must ensure – if necessary through a contractual obligation to the third-party provider – that the consumer can use an electronic withdrawal function. Exactly how this obligation is to be fulfilled in practice remains open. 

III. Elimination of the Model Cancellation Policy for Financial Services

The previous model withdrawal notices from Annex 3-3b of the EGBGB are deleted without replacement. Article 246b § 2(3) of the EGBGB, which guaranteed the business that it fulfilled its duty to inform regarding the right of withdrawal by providing the consumer with the corresponding model withdrawal notice, has been deleted accordingly. The legislative rationale states that the model withdrawal notices are not provided for in the version of the fully harmonized Consumer Directive to be implemented, and there is no legislative leeway. Financial service providers must therefore independently develop and implement legally compliant withdrawal notices.

In practice, this change – contrary to its intention – leads to legal uncertainty at the expense of the business. The financial services provider cannot simply assume that the cancellation policy it uses is sufficient to fulfill the duty to inform. 

IV. Expansion/Update of the Information Obligations under Article 246b § 1 EGBGB

The financial service provider’s duty to inform the consumer in accordance with Article 246b §§ 1 to 3 EGBGB (§ 312d(2) BGB) remains in effect and is expanded in scope.

New requirements include, in particular, information from the financial service provider regarding the consequences of late payment or default (Article 246b § 1 No. 8 EGBGB) as well as – where applicable – notices regarding personalized pricing based on automated decision-making. Furthermore, if environmental and social factors are incorporated into the financial service provider’s investment strategy, information must be provided regarding the environmental and social objectives pursued by the financial service (Article 246b § 1 No. 15 EGBGB). 

Violations of this obligation may be punished with a fine under Article 246e EGBGB. 

V. New Obligations: Duty to Remind and Duty to Explain

The law introduces additional obligations for financial service providers. 

The duty to remind (Article 246b § 2 (2) EGBGB) applies if, upon conclusion of a distance contract, the information required under Article 246b § 1 (1) EGBGB is provided to the consumer less than one day before the time at which the consumer becomes bound by the contract. In this case, the consumer must be reminded of the right of withdrawal under § 355 BGB as well as the procedure for withdrawal. This reminder must be provided on a durable medium between one and seven days after the conclusion of the distance contract.

The duty to provide explanations (Article 246b § 3 EGBGB) requires financial service providers to provide the consumer with comprehensible explanations of the essential features and implications of the contract on a durable medium prior to the conclusion of the contract. The aim is to enable an informed decision. In the case of distance contracts for financial services, consumers may use online tools to request additional explanations from a human representative, even after the contract has been concluded. 

VI. Conclusion and Need for Action

The new regulations lead to significant changes that require special attention from financial service providers. 

A positive aspect is that the clear time limit on the right of withdrawal now generally applies to distance contracts for financial services as well. At the same time, requirements regarding information obligations, digital processes, and contract drafting are increasing. The removal of the model withdrawal instructions and the resulting legal uncertainty must be viewed critically.

Financial service providers should therefore assess at an early stage whether adjustments are necessary. Particular attention must be paid to the proper preparation and distribution of the cancellation policy in accordance with Article 246b § 1 (1) No. 16 EGBGB, as well as to the implementation of the new digital requirements.