29 February 2012

EBF comments: EC Proposals for a Directive on consumer alternative dispute resolution & 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.

The EBF welcomes the results noted in the Civic Consulting and IMCO studies. 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 cross-border 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, 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, 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. 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.

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