Discurs de deschidere a lucrărilor Colocviilor Juridice BNR, 23 octombrie 2015

Alexandru Păunescu, director, Direcția Juridică, BNR

Good morning, Ladies and Gentlemen,

Thank you for joining us today. We are delighted and honored to host this international Conference on “ALTERNATIVE DISPUTE RESOLUTION IN THE BANKING SECTOR”, as part of the series of events Legal Colloquia of the National Bank of Romania.

The discussions on establishing an ADR entity for the banking sector have started vaguely somewhere back in 2006. According to a study conducted, at the time, on how to set up a Banking Ombudsman, all banks had in-house settlement systems, but only 42% of customers were aware of them. Also, the survey findings showed that the systems lack accessibility, quickness to provide response and consumers' financial literacy is inadequate. In 2009, the World Bank's Diagnostic Review of Consumer Protection and Financial Literacy for Romania, mentioned that a financial ombudsman should be put in place to strengthen confidence of borrowers and savers in using financial services.

Further, after the crisis, in the context of the necessity to ensure a proper implementation of the requirements set out by the EU Directive on consumer ADR, the Romanian banking industry’s stakeholders noted that the situation is defined, in particular, by consumer distrust and an increasing number of litigations before the courts. Consumers´ access to ADR is poor and ineffective, since existing ADR entities provided only mediation or other entities focused on business-to-business disputes. Moreover, there were no ADR entities handling disputes through procedures aiming at proposing or imposing a solution and none of the existing bodies was a member of FIN-NET to cover cross-border complaints.

One key way to increase consumer confidence is to provide accessible and user-friendly out-of-court procedures to resolve disputes, which, by nature, establish an optimal framework for dialogue between the parties. Like the courts, ADR schemes resolve individual disputes. Unlike the courts, they can also deal with consumer inquiries, and proactively feed back the lessons from their work to help businesses and consumers improve things for the future.

Against this backdrop, it became clear that stakeholders, including the banking regulatory and supervisory authority, need to act under a common strategy to converge towards the objectives of improving transparency and raise confidence among consumers by establishing an ADR entity for banking.

Considering this goal, expressed by the banking industry and consumer associations, and given the fact that the matter needed be the subject of technical analysis, both economic and legal, at the beginning of this year, it was established a working group, consisting of representatives of all interested parties (credit institutions, non-banking financial institutions, consumers, the Consumer Protection Authority, the supervisory authority and ADR experts), with the purpose to identify a viable solution regarding the set up, governance and the functioning of an ADR entity for the banking sector.

Consistent with the objective of restoring customer confidence, in order to be successful while establishing an ADR scheme, at least as far as the banking sector is concerned, we believe it is essential to make sure that consumers trust the entity they are addressing in this respect. To this extent, the ADR entity should possess knowledge, competence, impartiality, transparency and efficiency. In the case of establishing of a new entity which involves private funding, its impartiality is ensured by making sure that both parties to the dispute are equally represented. However, this may not suffice to build up its credibility, which is why we believe that, in addition, the Board of the new entity needs to benefit of the involvement of the relevant public institutions and entities in the field.

Thus, during the discussions within the working group, the emerging concept was that the ADR entity should involve not only representatives of the main associations dealing with consumer protection issues and of the banking community, but also representatives of the authority for consumer protection and the central bank, considering its supervisory tasks. Discussions proved to be constructive. The different stakeholders, including the National Bank of Romania, the National Authority for Consumer Protection, the Romanian Banking Association and consumer organizations, reached a consensus on the shape of a new entity, and, in August, the legislation establishing the ADR Centre for Banking passed and entered into force on September 7, 2015.
In a nutshell, the ADR Centre for Banking is a legal entity, set up by the law, which carries out statutory functions (of public interest), on a non-commercial, no profit basis. Its mission is to provide out-of-court resolution of consumer banking disputes, both national and cross border, by using the services of a third party (the Conciliator) who proposes or imposes a solution to resolve their dispute.
As provided by law, all banking disputes should be examined and resolved through the ADR procedures organised by the ADR Center.

The general activity of the ADR Center is coordinated by a Committee, consisting of 5 members, 4 of which are representatives appointed, equally, by the National Authority for Consumer Protection, the National Bank of Romania, the banking community and the consumer protection associations. The 4 above mentioned members nominate one independent member. The Chairman is appointed by the Committee members.

The Coordination Committee members are non-executives – they are not involved in examining and resolving the disputes and must refrain from influencing or giving instructions in this regard. Their main task is to take a strategic overview and ensure that the ADR Center is properly resourced and able to carry out its work effectively and independently. Also, the Committee sets out the rules of the ADR procedures and the selection criteria of the persons in charge with resolving the disputes.

The dispute resolution is exclusively a task of the Conciliators. The ADR process has to get its deserved share of balance and the right professional approach. Thus, Conciliators have to disclose any circumstances that might affect their independence and impartiality or give rise to a conflict of interest with either party to the dispute they are asked to resolve. Also, Conciliators have to have the necessary expertise, including legal training, a good reputation and cannot be subject to pressures that would potentially influence their approach towards the dispute.

When the performing of banking contracts goes differently than how the parties expected and the customer is not happy, the business must be given the chance to look into the problem. Thus, a prior condition to submitting a complaint to the ADR Center is that the consumer first tried to solve the issue directly with the professional. This is the way to make sure that the business is at least aware of the complaint and has the chance to make it right, but it is also a way to mitigate a potential consumer moral hazard. Following that, if the consumer is still not satisfied, he can submit the complaint to the ADR Center. Provided that the parties to the dispute are fully informed about their rights and the consequences of the choices they make in the context of an ADR procedure, the disputes may be resolved through two different procedures: one which aims at resolving the dispute by proposing a solution and the other one which aims at resolving the dispute by imposing a solution.

I will not go further on with the rules of procedure, since Prof. Brânduşa Ştefănescu´s presentation is particularly focused on the procedures organised by the ADR Center.

As a closing remark, at this point, I would like to add that as far as the ADR Center is concerned, clearly, this is only the beginning of the road. The first target was achieved – the relevant legislation is in force, the ADR Center is established by law. However, this achievement comes together with the undertaking to make it work. Thus, the purpose of the conference is to seek the experts’ views on the key features of an ADR scheme, in order to increase consumer confidence, how ADR schemes work in various Member States and how ADR schemes in the area of banking services could be further improved.

Thank you all for accepting our invitation and taking the time to travel here and share your experience.