I The objective and scope of the Recommendation, the basis for its formulation

Transcription

1 Recommendation No. 11/2012. (XI.8) of the President of the Hungarian Financial Supervisory Authority on the complaints handling procedure of financial organisations I The objective and scope of the Recommendation, the basis for its formulation The general objective of recommendations issued by the Hungarian Financial Supervisory Authority (hereinafter the Authority, English acronym: HFSA) is the improved predictability in the application of law and the protection of the interests of clients, who take part in the proceedings, in order to foster uniform application of legislation referred to the the competence of the Authority. The recommendations issued by the Authority set out principles over and above the provisions of law considered as a minimum requirement. When evaluating financial organisations and its stating findings or taking measures, the Authority considers not only conducts that deviate from the Recommendation, but also the implementation of, and compliance with, the principles set forth in the Recommendation. The objective of the Recommendation is to present the best practices that reflect the content of, and relate to, the legislative requirements but go beyond them. The recommended principles and methods, which are based on the Authority s enforcement practice and which also promote uniform application of law, serve to orientate the development of the appropriate service provider activity. With respect to the publication of this Recommendation the Authority expects that the principles presented therein and serving the interests of clients are efficiently incorporated into the day-to-day operation of service providers and constitute an integral part of the attitudes of executive officers and administrators in charge of complaints handling, and thereby become an organic component of all client related activities of institutions. The principles contained in the Recommendation and adherence to them serve not only the interests of clients but also those of service providers, since service provider behaviour that ensures high-level protection for client s interests is a positive competitive factor in client retention over the long run. A more efficient complaints handling practice mindful of client s interests will contribute to maintaining and strengthening public confidence in the operation of financial service providers, to mitigating reputation risks as well as to handling possible legal disputes between financial organisations and clients and to preventing future legal disputes. In meeting these objectives, the greatest responsibility lies with the organisational department of the service provider handling client complaints. Consequently, the principles laid down in the Recommendation are, in particular, applicable to the activity of administrators responsible for handling complaints. Furthermore, the objective of formulating this Recommendation is that the Authority should meet the principles set forth in the Guidelines 1 for complaints handling issued by the European Insurance and Occupational Pensions Authority (EIOPA) as well as to enforce 1 EIOPA-BoS-12069_.pdf

2 those presented in the best practices report 2 related to the complaints handling drawn up by EIOPA. Based on the Regulation of the European Parliament and of the Council 3 establishing EIOPA, EIOPA plays an active role in developing a uniform supervisory approach. EIOPA issues guidelines and recommendations in order to build efficient and effective supervisory practices and to ensure a uniform and consistent application of EU law. 4 The EIOPA Guidelines apply to the supervisory authorities of Member States and draw the attention of national supervisors to ensuring efficient and prompt complaints handling by insurance undertakings. Since the addressees of the EIOPA Guidelines are the supervisory authorities of Member States, it is therefore the Authority s duty to transpose these Guidelines into the Hungarian regulatory environment. Although the EIOPA Guidelines merely apply to complaints handling by insurance undertakings, but in the course of transposing them the Authority could not disregard the fact that the Hungarian financial sectoral legislation contains uniform requirements for the complaints handling of all financial organisations. Consequently, in order to maintain consistency and uniform regulation it is indispensible for the Authority to draw up its recommendation for complaints handling to be applicable to all sectors, based on the EIOPA Guidelines and on the principles defined in the best practices report. The scope of the Recommendation extends to the client complaints handling activities of the financial organisations listed in Section 4 of Act CLVIII of 2010 on the Hungarian Financial Supervisory Authority. The temporal scope of the Recommendation: The Recommendation the presidential decrees of the HFSA referred to below is/are applicable from the date of their entry into force, as of 1 January I. Laws and HFSA decrees related to the content of the Recommendation: Act CXCIII of 2011 on Investment Fund Managers and Collective Investment Schemes; Act CXXXVIII of 2007 on Investments Firms and Commodity Dealers, and on the Regulations Governing their Activities (Ifcd.)); Act CXVII of 2007 on Occupational Pensions and the Related Institutions; Act LX of 2003 on Insurance Institutions and the Insurance Business (Insa.); Act LXXXII of 1997 on Private Pensions and Private Pension Funds (Pfa.) Act CXII of 1996 on Credit Institutions and Financial Enterprises (Cife.); Act XCVI of 1993 on Voluntary Mutual Insurance Funds (Vfa.); 2 EIOPA-BoS-12070_.pdf 3 Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority (Article 29) (EIOPA Regulation) 4 EIOPA Regulation, Article 16 2

3 Decree No. 5/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provisions on complaints handling of financial institutions, payment institutions and electronic money institutions; Decree No. 6/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provision on complaints handling of voluntary mutual insurance funds; Decree No. 7/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provision on the complaints handling of private pension funds; Decree No. 8/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provision on complaints handling of occupational pension providers; Decree No. 9/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provision on complaints handling of insurance companies and independent insurance intermediaries; Decree No. 10/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provision on complaints handling of investment firms and commodity dealers; Decree No. 11/2012 (IX. 11.) of the President of the Hungarian Financial Supervisory Authority on the provisions on complaints handling of investment fund managers. III. General principles 1. The Authority considers it vital for service providers to cooperate with clients prior to the lodging of a complaint, during the whole process of complaints handling and after responding. 2. In their complaints handling service providers should act, in relation to client s rights and obligations arising from a contract, in line with the general framework of the requirements of good faith and mutual respect and it shall be proceed in a manner deemed reasonable under the given circumstances, laid down in legislation. 3. Service providers should conduct a complaints handling process enabling them to prevent, recognise and appropriately handle any further conflicts of interest that may arise between the client and the service provider. 4. The Authority considers it best practice for service providers to use the principle of transparency in the course of their complaints handling activities in order that clients can enforce their claims and to exhaust the legal remedies available to them. Based on that principle, service providers must increasingly ensure clarity, transparency, predictability as well as continuous access to information prior to and throughout the whole complaints handling. IV. Complaints handling department 5. It is forward-looking if service providers set up an organisational department that is responsible for complaints handling to ensure the full and fair investigation of complaints and to identify and mitigate possible conflicts of interest. The complaints handling department should be set up in accordance with the principle of proportionality as well as based on the nature of the financial organisation s activity. In that regard, the 3

4 financial organisation is to judge whether the above function should be assigned to a person who will be involved in complaints handling or to an existing department. 6. The head of the complaints handling department should ensure and control the procedure of the efficient handling of complaints, as well as the necessary internal information flow and adequate registration and data supply. 7. It is indispensible that the staff involved in handling complaints should have deep and thorough professional knowledge. 8. Service providers should require the acting administrator to comply with the relevant legal provisions and with the complaint management policy, and in case of a proceeding inconsistent with the above they should take the necessary actions. 9. The consumer protection contact person should with regard to managing consumer complaints cooperate with the complaints handling department. In doing so, the consumer protection contact person should ensure that the complaint management policy is formulated in accordance with the effective legislation, with the present Recommendation and with the internal regulatory tools, processes of the financial organisation and should also ensure that complaints handling is conducted at high quality, taking also into consideration the protection of client s interests. V. Principles relating to the service provider s obligation to provide information 10. With a view to client s interests, it is necessary for service providers to provide comprehensible, professional and meaningful information when providing information about the complaints handling process. 11. In personal contact with the client if so requested by the client service providers should allow sufficient time and provide peaceful circumstances for the client to study the complaints handling policy. 12. Service providers should provide clear, accurate and up-to-date information about the complaint, the complaints handling process as well as the enforcement of client s rights, in accordance with the all-time legislation. 13. It is best practice if - in addition to the complaints handling policies - service providers prepare short information publications, brochures about complaints handling in an easily comprehensible manner. It is best practice to make these information publications in an easily accessible manner in premises open to the clients. 14. It is important that service providers should use the terms applied in complaints handling consistently, in a uniform manner in all documents. 15. It is best practice that service providers tell clients the individual identification numbers of complaints made by phone, as well as the data serving to identify written complaints, in order to make complaints administration smoother for clients. 16. It is advisable that when handling complaints service providers should at the client s express request inform the client about the actual phase of the process. 17. It is best practice for service providers to draw the attention of clients, both verbally and in writing, to the website of the Authority and to the complaints form displayed on the website; they should also ensure links to the Authority s website on their own websites. It is expected that service providers should make available the Consumer complaint form prepared by the Authority, in printed form, in their premises open to the clients. 18. Service providers should facilitate that when lodging a complaint the client can record his/her objections and the reasons for them in the given file of complaint. Where possible, the client should be able to record the above objections and reasons properly 4

5 listed (stating each objection properly listed, in a manner suitable for identification), briefly and in the form of a list. If the client lodges a complaint using a tool other than the standard form presented by the Authority, service providers should ensure that the client has the possibility to indicate his/her objections properly listed - based on the principles set out above - in the course of lodging the complaint. 19. Service providers should cooperate with the persons who intend to act on as a proxy. The Authority proposes to service providers that they should prepare a sample authorisation letter in a form preferable to them to make the procedure easier for the proxy, and that they should publish such on their websites and in the premises open to the clients. If the client uses a letter of authorisation other than the sample published by the service provider, the service provider should inform the client about the formal requirements thereof. VI. Complaints handling process 20. Service providers should ensure a consistent standard of complaints handling throughout the whole process of communication with clients. To that end, they should strive to exhibit cooperative, flexible and helpful service provider behaviour when managing problems and complaints arising prior to the contract termination, during the contract termination and following the termination thereof. 21. In order that each and every element of the complaint can be clarified, it is justified for service providers to ensure the investigation of each and every problem/objection raised in the complaint. VII. Principles relating to the response obligation 22. When handling complaints received from clients (or from organsations, persons acting on their behalf) service providers should seek to provide a meaningful and descriptive answer, responding in full to each objection raised by clients. 23. A response meets the requirements of communication in plain language which is clearly understood, if the service provider not only makes reference to the relevant provisions of law but also interprets them briefly and gives reasons, in its response, for their application in the specific case. 24. When providing an answer to the investigation of a complaint, the service provider should also draw the attention of the client to the available legal remedies if the client does not agree with the service provider s answer. 25. It is best practice for financial organisations to send their opinion accompanied by an explanation to a client s recurring complaint which contains the same objection and the same reasons as indicated in his/her earlier complaint in such a manner that on top of compliance with legal requirements and without any delay or at least within the time limits, they should also attach their response given to the client s earlier complaint. 26. In case a complaint is rejected, simultaneously with providing information about the available legal remedies, service providers should give the client the mailing address of the Authority. 27. In line with section 3 in each presidential decree, cited in point II, issued in the subject area of complaints handling, the Authority expects that when a complaint is rejected by the financial organisation, the client should also be informed that based on the service provider s position the complaint lodged was aimed to 5

6 a) investigate the violation of the consumer protection provisions set out in Act CLVIII of 2010 on the Hungarian Financial Supervisory Authority (HFSA Act), or b) settle legal disputes pertaining to contract conclusion, validity, legal impacts and termination, or to contract violation and the legal impacts thereof. 28. Based on those contained in point 27 hereabove, the following shall be considered as consumer protection provisions: a) the provisions which are prescribed in the acts listed under Section 4 of the HFSA Act or in the implementing provisions thereof (information, business rules, etc.) and which define requirements as to the conduct exhibited vis-a-vis consumers using the services provided by organisations or persons defined in Section 4 of the same Act, and b) as specified in the acts below ba) provisions of the Act on the Prohibition of Unfair Consumer Practices against Consumers (misleading information, aggressive practice), bb) provisions of the Act on Essential Conditions of and Certain Limitations to Business Advertising Activity (direct marketing), as well as bc) provisions of the Act on Certain Issues of Electronic Commerce Services and Information Society Services (access to and forwarding of information, electronic advertisements). 29. Based on those contained in point 27 b) hereabove, issues relating to the contractual relationship include legal disputes pertaining to contract conclusion, validity, legal impacts and termination, or to contract violation and the legal impacts thereof. 30. Clients qualified as consumers must be informed that in the case of point 27 a) the consumer protection procedure can be initiated with the Authority. 31. In view of the above, it falls within the competence of the Authority, for instance, if clients qualified as consumers were not provided with the following: a) annual balance statement; b) preliminary information about interest rate increases; c) information about the central credit information system (Hungarian acronym: KHR); d) repayment table; e) information about the conclusion of the insurance contract; f) premium payment order or notice of cancellation. 32. Clients qualified as consumers must be informed that they may, at their own option, turn to the Financial Arbitration Board or to court in the case of point 27 a). 33. The Financial Arbitration Board may proceed, if - for instance - financial service providers: a) terminated the contract prior to the term thereof, b) failed to notify clients about their intention to withdraw the contract, c) charged to clients additional costs that were not allowed to the financial service providers based on the contract, the standard contract condition, the announcement or the list of conditions, d) their breach of contract caused damage, e) challenge the occurrence of an insurance event. 34. Exclusively the court may act in civil law issues related to: a) damage caused by incitement, b) damages associated with the liability insurance, c) legal grounds for inclusion in the central credit information system. In all other issues relating to the contractual relationship, clients qualified as consumers may based on the above also turn to the Financial Arbitration Board in addition to court. 6

7 35. If service providers believe that a complaint is related both to the infringement of a consumer protection provision and to a contractual issue, then the consumer must be informed about which elements of the complaint fall under the competence of the Financial Arbitration Board/court, and accordingly, about the authority or body to which each complaint element can be submitted. 36. If the complaint does not fall either under point 27 a) or 27 b), the financial service provider must inform the client that there is no possibility of further legal remedy. There is no possibility of further legal remedy, in particular, if the client: a) raises objection about the impolite conduct of an employee or intermediary of the financial service provider, proposes employment-law consequences, b) objects to the financial service provider s work organisation practices (e.g. waiting time), c) submits an equity petition to the financial service provider, d) objects to the non-conclusion of a contract (e.g. loan rejection), e) requests that a case closed should be reviewed by the financial service provider. VIII. Registration 37. Service providers should record client complaints as well as documents asked to be submitted by clients and the data of clients in accordance with the relevant legislation, in a retrievable manner and guaranteeing high-standard data protection for clients. 38. Complaints made by telephone should be registered by service providers using individual identification numbers to facilitate for service providers to retrieve the complaints and for clients to make reference to the complaints in the future. 39. It is justified to record data needed for the identification of the causes of complaints, for follow-up measurement, for risk management and for decision-making. IX. Internal monitoring, follow-up of complaints 40. There is a need for service providers to keep records that are capable of the internal follow-up of complaints. 41. It is justified that service providers continuously analyse complaints handling data to identify and address recurring or systemic problems and possible legal and operational risks, for example,: a. analysing the causes of individual complaints so as to identify root causes common types of complaint; b. considering wether such root causes may also affect other processes or products, including those not directly complained of. 42. In order to fully enforce client s interests, it is indispensible for financial organisations to correct, where reasonable to do so, such root causes. 43. It is expected that regular reporting is provided to the management of service providers about recurring or systemic problems where they are needed for the management to identify, measure, manage and control risks and take decisions in response to the causes of the complaint. X. Complaint management policy 44. The sample complaint management policy set out in the relevant decrees issued by the President of the Authority cited in point II define important basic requirements for 7

8 service providers. It is best practice that beyond the minimum legal requirements service providers should lay down in their policies additional information needed for efficient complaints handling and for adequate information provision to clients. 45. The complaint management policy must lay down the exact procedure of complaint handling in aclearly understandable manner for clients. 46. Service providers should write their complaint management policies by using minimum 11 pt font size; with regard to the printed form of the policy, it is a priority expectation that it is published in an easy to read form. 47. The publication of the complaint management policy is suitable for attention-drawing manner if it is displayed on the service providers websites in an easily accessible manner as well as is also made available in printed form in premises open to the clients. 48. It is indispensable that the service provider s complaint handling policy should be accessible, via the internal IT system, to each and every employee of the department involved in complaints handling. 49. The complaint management policy is approved by the senior management of the service provider, and they are responsible for its implementation, for checking compliance and thus for monitoring the procedure conducted in accordance with the policy. XI. Closing provisions 50. This Recommendation is a recommendation issued in accordance with Paragraph c), Section 21 of the HFSA Act. 51. The content of the recommendation issued by the President of the HFSA reflects the requirements set forth in legislation, the principles, methods, market standards and customs recommended based on the HFSA s legal practice. The Authority stresses that financial organisations may incorporate the content of this Recommendation into their regulations. Should that be the case, financial organisations will be entitled to indicate that those contained in the given regulations correspond to the relevant number of the recommendation issued by the President of the HFSA. If financial organisations intend to adopt only certain parts of the Recommendation, then they should refrain from making reference to the Recommendation or only refer to the parts adopted from the Recommendation. 52. Concurrently with publishing this Recommendation, the provisions on complaints handling in Recommendation No. 14/2001 on the customer service operations of financial organisations become repealed. 8