What steps need to be taken to make FIN-NET a comprehensive network, covering all Member States and financial services sectors?

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1 UNICREDIT GROUP S REPLY TO THE COMMISSION S PUBLIC CONSULTATION ON ALTERNATIVE DISPUTE RESOLUTION (ADR) IN THE AREA OF FINANCIAL SERVICES UniCredit holding company of UniCredit Group welcomes the Commission's consultation on an issue of relevant importance for the banking / finance sector. This initiative at European level takes place in the area of retail financial services of already increasing attention, in Italy, about the alternative dispute resolution systems. 1 - Membership of FIN-NET What steps need to be taken to make FIN-NET a comprehensive network, covering all Member States and financial services sectors? The Commission should further promote the adherence to the network, with institutional campaigns and public events that provide evidence of its operation. Meetings should be further promoted where an audience of highly qualified companies, their representations of class, the various ADR bodies, professional people such as lawyers and professors working in the sector, local institution and associations of consumers should take part. All these players could make these events constructive and propositional, to promote the spread of this tool even as a best practice of business self - reference. To this end, the out of court settlement bodies should provide the European Commission and the various competent Authorities the information relating to disputes already resolved in order to provide community users a good knowledge of the case records and the quality of this instrument. This would help to create and / or improve the feeling of confidence about the possibility of using, even in 1

2 cross-border cases, a system that allows investors to effectively protect its position alternately to channel court. Also regular forum would be useful, at European level, but also at national level, for a strong awareness of the importance to adhere to FIN-NET. Binding? Nonbinding? It is believed that the involvement of the Member States can be effectively pursued through the adoption of non-binding instruments. The creation of opportunities to meet more frequently between the ADR part of FIN-NET, and the countries that currently there are not members it could be effective. For the development of alternative dispute resolution schemes it is necessary, however, that the types of ADR have specific requirements such as to encourage subjects involved in the European market to use these systems since they are regarded as reliable and fully functional for the purpose of potential users. Essential requirements must be eg. transparency and simplicity of the procedure, the efficiency of its organization but most of all providing a much quicker and cheaper way to settle dispute than in couts and the opportunity to treat of points of law that would not be normally brought to attention in court Creation of ADR schemes What action need to be taken to encourage the creation of ADR schemes, where they do not exist? ADR is already the subject of particular attention by Member States, attention that sometimes has resulted in legislative initiatives (eg in Italy was established recently Bank Conciliator in banking disputes, as well as the Chamber of Conciliation and Arbitration with Consob for investment services). An increased awareness resulting from actions taken at European level, as indicated above, also through FIN-NET, it might be functional for this purpose. 2

3 Should any action be taken at EU level? If yes, what form should it take? Binding? Non-binding? In this area it is considered that action should be performed preferably by nonbinding instruments. It is our opinion that the realization of a common body of rules according to which each member of FIN-NET will handle out-of-court disputes and cross border complaints as well could create a virtuous circle of competition among financial services providers, with each other, and among States to encourage the widespread of ADR systems; bailing out of the business would be the award for non-compliant States and financial providers. 5.3 Adherence to ADR schemes Should adherence to an ADR scheme be mandatory to all financial services providers? If yes, should the financial services providers be obliged to adhere to the ADR scheme only in the country where they are established or to all the ADR schemes in Member States where they provide services? In Italy, the adherence to a system of alternative dispute resolution is mandatory for banking disputes (Article 128 bis of the Testo Unico Bancario) and financial complaints ( Article 32 bis of the Testo Unico Finanziario) ; as a matter of fact, in the area of financial services there are several schemes in competition with each other, public or private, between which the financial services providers and consumers can choose. That is, but nevertheless, no provisions shall not prejudice customers right to avail themselves, at any time, of all other means of protection provided for by law. Regarding the adherence to more ADR schemes set out in different EU countries, the solution might be to apply the law in force in each Member State (for which if the membership is mandatory for domestic intermediaries, it will be for those operating cross border). 3

4 Binding? Non binding? It is not considered necessary at the present an action by the Commission Information to consumers about ADR schemes and FIN-NET Should financial services providers be obliged to inform customers about the possibility to resolve disputes through an ADR scheme? Should this obligation be applicable also with regard to FIN-NET? Costumers awareness about the possibility of resolving the disputes through an alternative dispute resolution scheme, including the cross border disputes, would enhance investors confidence in the market and in the purchase of financial products provided by financial intermediaries from different states. This awareness may also have a positive effect on the relationship between customers and financial intermediaries. Also among the various ADR schemes available, FIN-NET is a highly effective tool to facilitate the use of cross-border alternative dispute resolution by investors and financial services providers, having got over the differences between the ADR schemes operating in the various Member States. Binding? Nonbinding? It is not considered necessary at the moment an action by the Commission. Member States should encourage the spread of such awareness on the part of customers of financial services providers. When should the financial services provider inform its customer about the possibility to address the complaint to an ADR scheme? As part of the contractual information? At the moment when the dispute arises and it 4

5 cannot be settled between the provider and the customer bilaterally? Both? Other? The customer should be informed about the instruments at its disposal in relation to complaints before the conclusion of the contract. In Italy, it is a binding contractual information to be given in written to customer before entering any contract in financial service Awareness of FIN-NET and of its member ADR schemes Is there a need to promote FIN-NET and its member ADR schemes? If yes, what would be the best way to do so? An action geared to spread the knowledge of FIN-NET, its operation, and the players who are part of it, could contribute, without doubt, to improve the level of consumers confidence that operate in cross border financial services and consequently to achieve a truly competitive market in the financial services. Essentially it is necessary increase the investor s awareness that, in the event of disputes, they could benefit from a system - not necessarily domestic- that allows to protect effectively its position. In real experience a way to do so could be the growing of a freeware-database of case report handled by ADR system at European level to consult by anyone ( i.e. consumers or financial providers or whoelse may be concerned) improving access to voluntary justice. * * * Contact details Francesco Palazzolo Head Litigations UniCredit Group Francesco.Palazzolo@unicreditgroup.eu 5