D0369B

Transcription

1 D0369B EBF observations on the European Commission Proposals for a Directive on consumer alternative dispute resolution and a Regulation on consumer online dispute resolution The European Banking Federation has followed with great interest the work conducted by the European Commission and the European Parliament which has consisted in analysing existing Alternative Dispute Resolution (ADR) entities and their functioning in the different Member States. 1 As noted in the 2009 Eurobarometer Aggregated Report 2, consumers have indicated that they would be more likely to employ one or more of the out of court routes initially, hoping to avoid costly proceedings. The Report notes further, that those consumers who had used ADR viewed it very positively. The most frequently identified rationale behind this, as well as one of the benefits of using ADR, is that it involves an unbiased 3 third party in the process. Using ADR was considered to be less aggressive towards the supplier, less intimidating for the consumer and cheaper than an individual court action. The EBF has constantly advocated that alternative mechanisms for resolving conflicts are the only ones capable of providing effective solutions that serve the interests of both customers and businesses. Therefore, the EBF welcomes the statement of the Internal Market and Consumer Protection Committee (IMCO) that ADR mechanisms may provide parties with a faster and cheaper solution. Early settlement of disputes must be strongly encouraged 4 and court litigation must be viewed as a last resort option. The EBF welcomes the results noted in the Civic Consulting and IMCO studies 5. These studies identify existing geographical and sectoral level gaps in specific areas but state this is not the case in relation to financial services (the majority being covered by ADR schemes) which are widely set up to solve such disputes, often including cross-border cases. A network for settling crossborder financial disputes out-of-court (FIN-NET) already exists. According to the Memorandum of Understanding linking the FIN-NET members, access is open only to schemes that comply with the principles set out in Commission Recommendation 98/257/EC 6, notably independence, legality, liberty, transparency and effectiveness. Since the network consists of ADR entities handling cross-border disputes between consumers and financial services providers, its role will certainly increase in the light of Article 13 (2) of the Proposal for a Directive on consumer Alternative Dispute Resolution (hereinafter the Directive ). In this context, defining at Union level high-level common principles for ADR entities and procedures in all Member States will ensure that quality levels of ADR procedures are more homogenous in the Union. Furthermore, 1 Civic Consulting Study on the use of Alternative Dispute Resolution in the European Union, 2009; Eurobarometer Aggregated Report Consumer redress in the EU: consumers' experiences, perceptions and opinions, 2009; European Parliament - Internal Market and Consumer Protection Committee (IMCO) Cross-border ADR in the European Union, 2011; 2 Eurobarometer Aggregated Report Consumer Redress in the European Union: Consumer Experiences, perceptions and choices, 2009, p. 63 and 64; 3 Ibid, p. 47; 4 IMCO Opinion on the JURI own-initiative report Towards a Coherent European Approach to Collective Redress, 2011, p. 5; 5 Civic Consulting Study on the use of Alternative Dispute Resolution in the European Union, 2009, p. 60; European Parliament - Internal Market and Consumer Protection Committee (IMCO) Cross-border ADR in the European Union, 2011, p. 30; 6 Commission Recommendation 98/257/EC of 30 March 1998 on the principles applicable to the bodies responsible for out-ofcourt settlement of consumer disputes, OJEC of 17 April 1998, L 115/31; EBF a.i.s.b.l 10, rue Montoyer B-1000 Brussels +32 (0) Phone +32 (0) Fax

2 they are expected to provide an advantage in ensuring a more efficient treatment of consumer disputes, particularly those arising from cross-border transactions. The EBF shares the general aim of the European Commission's Proposals to further the internal market and ensure a high-level of consumer protection by removing gaps in the coverage of ADR systems and tackling the lack of awareness of consumers so that all consumers in the internal market, particularly in cross-border cases, have an additional and less costly choice of legal protection. The EBF also shares the general aim to promote the digital dimension of the internal market by providing low-cost ways to resolve disputes arising by the cross-border sale of goods or the supply of services online. The Directive s purpose is to ensure that disputes can be submitted to an Alternative Dispute Resolution (ADR) entity fulfilling the requirements set out in this Directive. Hence, the EBF welcomes the clarification in Recital 13 of the Directive that allows Member States the possibility to fulfil this obligation by relying on existing ADR entities, and eventually adjusting their scope of application, but does not oblige them to create a specific ADR entity in each retail sector. The EBF shares the spirit of the principles set out in the Directive since they aim at ensuring expertise, impartiality, transparency and fairness of ADR procedures. As mentioned above, FIN-NET members already comply with the principles set out in the Commission Recommendation 98/257/EC. However, the Proposal should only set out high-level common principles applicable to ADR entities (see particularly EBF comments on Article 8 (d)). The Proposal will apply to both domestic and cross-border cases. In many countries there are already established traditions and legislation in place governing the use and functioning of ADR entities. 7 Therefore, attention should be paid by the European institutions, and also by national authorities during the future transposition period, to avoid any far-reaching legislation leading to a strong formalisation of the ADR functioning and procedures. Otherwise, this could create parallel institutions alongside national courts. Furthermore, it would deprive ADR procedures of some of their most important benefits, as a voluntary tool for solving private disputes, notably their flexibility and low-cost. Recital 27, Articles 16 and 17 of the Directive The EBF welcomes the fact that, as mentioned in Recital 27 of the Directive, in relation to Article 16, Member States should only encourage ADR entities on the use of harmonised methodology for classifying and reporting consumer complaints and enquiries to provide information in accordance with Commission Recommendation 2010/304/EU. The information required under Article 16 is provided, inter alia, for the purposes of establishing whether a given ADR entity complies with the requirements of the Directive (Article 17). Considering that the requirements of Article 16 will be subject to a sanctioning regime under Article 18, it is the EBF members understanding that the use of this harmonised methodology should not be made compulsory by 7 A consistent approach in developing an ADR culture where a large amount of disputes are actually solved by ADR entities, as a valid alternative to the judicial decision exists in many countries. This approach is adapted to the existing national specifics in each country. Therefore, attention should be paid by the European institutions, and also by national authorities during the future transposition period, to avoid any far-reaching legislation leading to a strong formalisation of the ADR functioning and procedures. In Italy, for instance, efforts on the private side (Associazione Conciliatore Bancario for banking services - Conciliatore Bancario and an Ombudsman for investment services), as well as on the public side (Arbitro Bancario e Finanziario Bank of Italy and Camera di Conciliazione e Arbitrato Consob) have been made. National legislation governing the organization of ADR entities, professional and integrity requirements for mediators, incompatibly conditions, length and costs of the procedure already exists. In addition, a list of the ADR entities is published and maintained on the Italian Ministry of Justice website. A recent law decree (d.lgs. 28/2010) set out that a party in a dispute, who has the intention to bring court proceedings, is obliged to attempt to have the dispute solved by an ADR entity first (Article 5 of the said decree). 2 P a g e

3 the national authorities since this could increase the costs which ADR entities would have to sustain. Recital 17, Article 7 (1) (b) of the Directive As mentioned above, the 2009 Eurobarometer Aggregated Report on consumers experience and perception in consumer redress, noted, as one of the most frequently identified rationale for using an ADR system, the fact that it involves an unbiased third party in the process. Overall, consumers find ADR systems less intimidating and cheaper than an individual court action and those with experience of the mechanism found it uncomplicated and transparent. Article 7 (1) (b) of the Directive sets out a requirement for the ADR entities to make publicly available on their websites, and in printed form on their premises, information on the source of financing, including a percentage share of public and private financing. Many ADR systems are privately funded or co-funded and this has not and should not be identified as an indication per se of a pressure leading to impartiality. Recital 17 of the Directive clarifies, in relation to the principle of impartiality, that when the ADR entities are financed by one of the parties to the dispute, or by an organization, of which one of the parties is a member absence of pressure has to be ensured. Article 6 of the Directive provides for safeguards for the impartiality of the natural persons in charge of Alternative Dispute Resolution. In addition, when a solution is being proposed, the requirements of Article 9 (2) of the Directive aim at ensuring fairness in the procedures. EBF members fail to understand the benefits that would arise from disclosing such information publicly since it could create a wrong perception as to the quality of a given ADR system. The information under Article 7 (1) (b) of the Directive is indeed related to the organization and functioning of the ADR system which already has to be provided to the competent authorities (Article 16 (1) (b)). Article 8 (d) of the Directive, Article 9 (b) of the Regulation Article 8 (d) of the Directive requires the dispute to be resolved within ninety days from the date on which the ADR entity receives the complaint. It is further specified that in the case of complex disputes, the ADR entity may extend this time period. Article 9 (b) of the Regulation sets out instead a thirty-day period from the moment when the proceedings have been instituted. Apart from the different scope of application of the two instruments, the EBF members fail to understand the reason for: i) having set a specific time period for resolving the disputes and; ii) the difference between the time periods set out in the Directive and in the Regulation. According to Article 5 (3) (c) of the Regulation, one of the functions of an On-line Dispute Resolution (ODR) platform is to refer complaints to the ADR entity which the parties have agreed to use. For the reasons expressed below, EBF members believe that the proposals should lay down only high-level principles and consequently, should not fix any time periods: 1. Under the proposed text, the future Directive will apply, regardless of the sector concerned, to both domestic and cross-border cases. Although there is a possibility to extend the time period beyond 90 days for complex cases, it has to be acknowledged that it is highly probable that the majority of financial services, and probably cross-border cases, will be considered complex. As a result of this and because of the broad scope of the Proposal for a Directive, the exception for complex cases will become the general rule. In addition, EBF members believe that the period is too short to give the parties to the dispute adequate time to submit comments. In many countries, recognised ADR schemes in the banking sector are required by law to grant to both sides time period to submit comments. Unlike complaints about goods purchased from an internet merchant, disputes concerning investment products, in particular, are normally 3 P a g e

4 highly time-consuming when it comes to clarifying the facts and evaluating the legal position. Therefore, the length of the period necessary to handle the case will not always be under the control of the business or ADR scheme. 2. Commission Recommendation 98/257/EC sets out that only short periods should elapse between the referral of a matter and the decision ; 3. As stated in the Explanatory Memorandum 8 of the Proposal for a Directive, the decision on the ninety-day period is based on the findings of the Civic Consulting Study conducted in The Study states that the majority of ADR cases are decided within a period of ninety days. However, since the Study itself notes that the take up by consumers of crossborder cases is still limited, particularly in the financial sector 9, it appears that the case studies examined, are mainly domestic and of general nature. Therefore, the average period 10 of ninety days identified in the Civic Consulting Study is based on general domestic cases and does not take sufficiently into account the cross-border dimension of the cases or the financial services sector specifics. 4. It should be also taken into account that leaving the decision to the discretion of each ADR entity on how much to extend the time period for complex cases, may not always be to the benefit of the consumer. The result could be that at the discretion of the various ADR entities, different time periods are granted for similar cases. Recital 22 and Article 10 (2) of the Directive The EBF agrees that when a dispute arises it is essential that consumers can identify quickly which ADR entity is competent to deal with their complaint. Recital 22 refers to main commercial documents, whereas Article 10 (2) requires the provision of the information specified in Article 10 (1). Namely, on the traders website, if such exists; and in the general terms and conditions of contracts for the sale of goods or provision of services; and on invoices receipts relating to such contracts. In addition to the information in Article 10 (1) the information on invoices should provide details on the ADR entity concerned, plus the conditions for using it. Considering the limited space available on such documents, a requirement to include information regarding ADR entities on invoices and receipts should not go beyond a specification of the name of the respective ADR entity. The EBF members note that as far as financial services are concerned, information on the out-ofcourt complaint, and redress mechanism on the methods for having access to it, is already part of: the minimum content to be included in the contract for consumer credit agreements (Article 10 (2) (t) of the Consumer Credit Directive); the pre-contractual information contracts for distance marketing of financial services (Article 3 (4) (a) of Distance Marketing of Consumer Financial Services Directive) and under Article 42 (7) of the Payment Services Directive, which is also subject to information requirement to notify further changes. In the light of the above, an obligation to include such information also on invoices and receipts seems to be rather disproportionate. 8 Explanatory Memorandum to the Proposal, p. 3 is referring to the European Parliament Study which in turn is referring to the Civic Consulting Study on the use of Alternative Dispute Resolution in the European Union, 2009, p. 43 and 43; 9 Civic Consulting Study on the use of Alternative Dispute Resolution in the European Union, 2009, 17 and 62; 10 The 90 days period is only an average period. In some countries, such as Italy, the national legislation already states that any ADR entity should end the procedure within 120 days, which may be extended under specific circumstances. 4 P a g e

5 Article 16 (2) (b) of the Directive Article 16 (2) (b) requires the ADRs to notify the rate of ADR procedures, discontinued before an outcome was reached, to the competent authorities. The EBF members note that this requirement is not sufficiently clear. Hence, it should be deleted or alternatively, it should be clarified further. It is possible that, based on comments submitted by the respective trader, the complainant party simply decides not to proceed further. Categorising similar situations as discontinued before an outcome was reached would therefore not provide any meaningful information since it does not provide any data on the real reasons why the procedure was discontinued but could be interpreted as a failed arbitration attempt. Article 7 (1) of the Regulation The complainant party is required to use the electronic complaints form on the ODR platform s website pursuant to the provisions under Article 7 (1). The complainant party may do so in their mother tongue and the ODR platform shall communicate with the complainant party in the same language (Article 8 (2)). Once both parties agree on an ADR entity, the platform shall automatically transmit the complaint to that ADR entity (Article 8 (5)). It appears that this does not include a translation of the complaint into the language in which the procedure with the chosen ADR entity will take place (Article 8 (3) (b)). The role of the ODR facilitators under Article 6 (2) (a) might be further explored in this respect. For instance, they should promote the settlement of disputes by facilitating communication between the parties and the competent ADR entity if necessary. What would be helpful is a clarification to the effect that such facilitation comes specifically in the form of a translation of the complaint into the language (s) of the ADR entity. What is more, that such translation services shall not only be rendered by the ODR facilitators if necessary but in each and every case. Contact Person: Tatyana Ferragallo (T.Ferragallo@ebf-fbe.eu). Related documents: European Commission s proposals for a Directive on consumer Alternative Dispute Resolution and a Regulation on consumer Online Dispute Resolution. * * * 5 P a g e