The Council of Ministers of the European Union has agreed to pass a law banning the use of unsolicited email and so-called inertia marketing for the promotion of financial services.

The Distance Selling of Financial Services Directive covers the marketing of financial products such as credit cards and pension plans to consumers across the internet, by phone and fax and by traditional direct mail.

Ministers of the 15 EU member states agreed to ban inertia selling, which involves sending unsolicited financial products or services to a consumer and charging them for these before the consumer has agreed to buy them.

The ministers also agreed to introduce an opt-in rule that would prohibit companies from using unsolicited email to sell their wares. At present an opt-out rule applies, which allows companies to assume that a consumer wants to receive its direct marketing literature unless they specify otherwise.

"This is a major breakthrough that will provide consumers with much-needed protection and rights. Distance marketing is currently dominated by classic techniques such as mail and telephone.

"But the Directive is also a key step in creating a regulatory framework to build consumer confidence in electronic commerce, inside a consumer's member state or across borders," Health and Consumer Protection Commissioner David Byrne said of the agreement.

Before the EC Directive can become law it must be approved by the European Parliament in a second reading expected before the end of this year.

A Directive regulating the distance selling of all other goods and services was adopted in 1997 and came into force last year. Financial services were excluded from its scope since these were considered to require a separate set of rules.

A law on unsolicited email covering all other industries is due early next year. The question of whether to apply opt-in or opt-out to email marketing is provoking hot debate; the Commission favours opt-in, but many members of the European Parliament prefer the more industry-friendly opt-out approach. The spamming question is included in the proposed Data Protection in Telecommunications Directive.