Alternative resolution by mediation of consumer disputes related to financial services in Romania

- within the framework of the practices of the EU Member States -

Professor Carmen Blan Ph.D. Academy of Economic Studies Faculty of Marketing Bucharest, Romania
Katowice, 7 March 2011

CONTENTS
Section I. II. III. V. The importance of the topic Definition of ADR Types of ADR procedures Page 3 5 10 15 42 52 71 75

IV. Mediation in the EU: the regulatory framework VI. Mediation in Romania: the regulatory framework VII. Mediation in the sector of financial services in Romania VIII. Conclusions IX. Recommendations

Mediation in the sector of financial services in the EU Member States 31

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Section I The importance of the topic

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The importance of the topic

Romania: increasing number of customer complaints relative to the contractual relationships with financial institutions, especially banks
NACP received: 4,000 complaints relative to the banking services in 2008 3,000 complaints in 2009 out of which 650 have been submitted to courts Most complaints referred to: unjustified increases in the bank commissions and in the interest rates for credit contracts that have been already signed by banks and customers other modifications of the clauses after the conclusion of the contract and without customer acknowledgement and agreement

EU Member States: the current trend to develop and implement ways of alternative dispute resolution
that represent more convenient alternatives for customers in terms of time and financial resources, in comparison with the classical judicial system

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Section II Definitions of ADR

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Various definitions
Numerous international debates
Definitions vary on a continuum between very narrow to very broad perspectives

On one side:
there is a strict technical meaning that refers only to the non-judicial devices that may be used for out-of-court dispute resolution

On the other side:

there is a broad definition according to which alternative dispute resolution refers to non-judicial as well as to judicial devices that are an alternative to the ordinary or traditional procedures

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Study commissioned by the European Commission: 2007 (1/2)

Stuyck, J. et al., 2007. An analysis and evaluation of alternative means of consumer redress other than redress through ordinary judicial proceedings. Final report. Leuven: Study Centre for Consumer Law Centre for European Economic Law at the Law Faculty of the Katholieke Universiteit Leuven (Belgium), 17 January 2007. Study made in 28 countries:
25 Member States of the EU Australia, Canada and the USA

ADR may be defined as a continuum between:

no action and reliance on ordinary court procedures

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Study commissioned by the European Commission: 2007 (2/2)

Five categories of mechanisms to obtain redress (other than individual redress through ordinary court procedures):
a) direct negotiation (between consumer and the merchant) b) mediation and arbitration c) small claim procedures d) collective actions for damages e) injunctive relief

The report has revealed that each analyzed country has a unique mix of ADR processes and techniques

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Most recent study on ADR in the EU: 2009

Alleweldt, F. et al., 2009. Study on the use of alternative dispute resolution in the European Union. Final report. Berlin: Civic Consulting of the Consumer Policy Evaluation Consortium (CPEC), 16 October 2009. The study referred to:
characteristics and use of the ADR schemes procedures and functioning of the ADR schemes conformity with EC recommendations and the best practices.

Major strengths of the report:

detailed perspective of the ADR schemes applied by each Member State data about all the ADR bodies, by economic sector

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Section III Types of ADR procedures

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10

Types of ADR procedures (1/4)

Criterion:
type of involvement of the third party

Three distinct categories of ADR procedures:

a) conciliation or mediation b) recommendation and binding decision c) arbitration

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11

Types of ADR procedures: a) conciliation or mediation (2/4)

The 3rd party:
may help the parties in dispute without formally expressing an opinion on the possible solutions to the dispute

The parties:
are invited to start or continue a dialogue and to avoid confrontation based on consensus, the parties themselves identify the personalized solution adapted to the nature of the dispute

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12

Types of ADR procedures: b) recommendation and binding decision (3/4)

The 3rd party:
identifies a solution and presents it to the parties in dispute

Within this ADR category, there are two possible types of solutions: recommendation and binding decision
b1) Recommendation The parties in dispute are free to accept or not a recommendation made by the third party. A consumer who is not satisfied with the recommendation may go to court Ex: consumer complaint boards in the Scandinavian countries

b2) Binding decision The decision of the third party is binding on the tradesperson Such decisions are made by third parties such as ombudsmen (in banking and insurance sectors) Similarly, the consumer who is dissatisfied with the decision may go to court

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13

Types of ADR procedures: c) arbitration (4/4)

The 3rd ADR category resembles the court procedures The decisions made by an arbitrator:
are binding on both parties they have the status of enforceable decisions and consequently the settled dispute cannot be taken to court

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Section IV Mediation in the EU: the regulatory framework

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Commission Recommendation of 4 April 2001 (1/8)

Commission Recommendation of 4 April 2001 on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes. C(2001) 1016, Official Journal, L 109, 19/04/2001, Brussels, 4 April 2001, pp. 56-61. Principles:
a) Impartiality b) Transparency c) Effectiveness d) Fairness

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Commission Recommendation of 4 April 2001: a) impartiality (2/8)

Impartiality should be guaranteed by ensuring that those responsible for the procedure:
a) are appointed for a fixed term and shall not be liable to be relieved from their duties without just cause b) have no perceived or actual conflict of interest with either party c) provide information about their impartiality and competence to both parties prior to the commencement of the procedure

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Commission Recommendation of 4 April 2001: b) transparency (3/8)

1. 2. The transparency of the procedure should be guaranteed Information about the contact details, functioning and availability of the procedure should be readily available to the parties in simple terms so that they can access and retain it before submitting a dispute

3. In particular, information should be made available on:

how the procedure will operate, the types of disputes that can be dealt by it and any restrictions on its operation b) the rules governing any preliminary requirements that the parties may have to meet, and other procedural rules, notably those concerning the operation of the procedure and the languages in which the procedure will be conducted c) the cost, if any, to be borne by the parties d) the timetable applicable to the procedure, particularly with regard to the type of dispute in question; e) any substantive rules that may be applicable (legal provisions, industry best practice, considerations of equity, codes of conduct) f) the role of the procedure in bringing about the resolution of a dispute g) the status of any agreed solution for resolving the dispute a)

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Commission Recommendation of 4 April 2001: b) transparency (4/8)

4. Any agreed solution for resolving the dispute by the parties should:
be recorded on a durable medium clearly state the terms and the grounds on which it is based

That record should be made available to both parties

5. Information on the performance of the procedure should be made publicly available, including:
a) the number and types of complaints it has received and their outcome b) the time taken to resolve complaints c) any systematic problems arising from complaints d) the compliance record, if known, of agreed solutions

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Commission Recommendation of 4 April 2001: c) effectiveness (5/8)

1. The effectiveness of the procedure should be guaranteed 2. It should be easily accessible and available to both parties
for instance by electronic means, irrespective of where the parties are situated

3. The procedure should be either free of charge to consumers, or any necessary costs should be both proportionate to the amount in dispute and moderate. 4. The parties should have access to the procedure without being obliged to use a legal representative
nonetheless the parties should not be prevented from being represented or assisted by a third party at any or all stages of the procedure.

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Commission Recommendation of 4 April 2001: c) effectiveness (6/8)

5. Once a dispute has been submitted it should be dealt with in the shortest possible time commensurate with the nature of the dispute.
The body responsible for the procedure should periodically review its progress to ensure the parties' dispute is being dealt with expeditiously and appropriately

6. The conduct of the parties should be reviewed by the body responsible for the procedure to ensure they are committed to seeking a proper, fair and timely resolution of the dispute
If one party's conduct is unsatisfactory, both parties should be informed in order to enable them to consider whether to continue the dispute resolution procedure

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Commission Recommendation of 4 April 2001: d) fairness (7/8)

1. The fairness of the procedure should be guaranteed
a) the parties should be informed of their right to refuse to participate or to withdraw from the procedure at any time and access the legal system or other out-of-court redress mechanisms at any stage if they are dissatisfied with the performance or operation of the procedure b) both parties should be able to freely and easily submit any arguments, information or evidence relevant to their case on a confidential basis to the procedure unless agreement has been given by the parties to pass such information to the other party. If at any stage, the 3rd party suggests possible solutions for resolving the dispute, then each party should have the opportunity to present their viewpoint and comment on any argument, information or evidence presented by the other party c) both parties should be encouraged to fully cooperate with the procedure, in particular by providing any information necessary for a fair resolution of the dispute d) prior to the parties agreeing to a suggested solution for resolving the dispute, they should be allowed a reasonable period of time to consider this solution

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Commission Recommendation of 4 April 2001: d) fairness (8/8)

2. The consumer should be informed in clear und understandable language, before agreeing to a suggested solution, of the following points:
a) he has the choice as to whether or not to agree to the suggested solution b) the suggested solution may be less favorable than an outcome determined by a court applying legal rules c) before agreeing to or rejecting the suggested solution he has the right to seek independent advice d) use of the procedure does not preclude the option of referring his dispute to another out-of-court dispute resolution mechanism, in particular within the scope of Recommendation 98/257/EC, or of seeking legal redress through his own judicial system e) the status of an agreed solution

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European Code of Conduct for Mediators: 2004 (1/3)

In 2004, the Commission expressed its support for a European Code of Conduct for Mediators and put forward a proposal for a directive on mediation The code of conduct:
was developed by a group of stakeholders with the assistance of the European Commission was officially presented on 2 July 2004, on the occasion of a conference organized in Brussels in the preliminary stage, the Code must have only the character of an informal document, not being formally adopted by an EU institution

Individual mediators and organizations may voluntarily subscribe to the code

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European Code of Conduct for Mediators: 2004 (2/3)

Establishes a set of principles to be applied in civil and commercial matters by the individuals and organizations that subscribe to it Mediation:
= any structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a third person (mediator)

The text of the code refers to:

a) competence, fees of mediators and promotion of their services b) independence and impartiality c) the mediation agreement, process and settlement d) confidentiality

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European Code of Conduct for Mediators: 2004 (3/3)

The independence of the mediator is an aspect of utmost importance The mediator has the obligation to disclose any circumstances that may generate a conflict of interests
any personal or business relationship with one or more of the parties any financial or other interest, direct or indirect, in the outcome of the mediation the mediator, or a member of his firm, having acted in any capacity other than mediator for one or more of the parties.

Upon request from the parties and within the limits of his/her competence, the mediator must inform the parties relative to:
the manner in which they may formalize the agreement the possibilities for making the agreement enforceable

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Directive 2008/52/EC (1/4)

Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters, Official Journal, L 136 , 24/05/2008, pp. 3-8. Main goal of the Directive;
to facilitate the access to ADR to promote the amicable settlement of disputes by: encouraging the use of mediation ensuring a balanced relationship between mediation and judicial proceedings

The provisions of the Directive refer to the cross-border disputes

However, Member States may apply these provisions to the internal mediation processes

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Directive 2008/52/EC (2/4)

The definition of the concept of mediation
is similar to that presented in the Code of Conduct for Mediators

The mediation process may take place due to one of the following reasons:
the initiative of the parties a suggestion or order of a court the provisions of the law of an EU Member State

The Directive provisions referred to aspects such as:

a) ensuring the quality of mediation b) recourse to mediation c) enforceability of agreements resulting from mediation d) confidentiality of mediation e) effect of mediation on limitation and prescription periods

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Directive 2008/52/EC: Key provisions (3/4)

Parties may render enforceable the agreement concluded following mediation, giving it a status similar to that of a court judgment
The enforceability is obtained by: judicial approval notarial certification

The access of parties to justice is preserved should mediation not succeed The provisions relative to the periods of limitation and prescription ensure that parties are not prevented to go to court

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Directive 2008/52/EC (4/4)

An aspect that requires further debate:
the independence of mediators

While the Code of Conduct for Mediators has dedicated a substantial paragraph to it, the Directive did not address this issue

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Section V
Mediation in the sector of financial services in the EU Member States

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Mediation schemes in the EU Member States (1/2)

There is a diversity of mediation schemes for the commercial disputes, in general, and for the financial service sector, in particular. FIN-NET (Financial Services Complaints Network)
Established by the EU Goal: to facilitate the access of consumers to ADR systems in the field of financial services Complements the EEJ-Net FIN-NET is a communitywide network that links the national ADR schemes relative to financial services This initiative may have a favorable impact on cross-border disputes

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Mediation schemes in the EU Member States (2/2)

No single definition of mediation accepted in all the countries The types of outcomes provided by the ADR schemes that include in their denomination the word mediation vary
From: consensual agreement To: non-binding recommendations / decisions

Consensual agreement, as a distinct outcome among others, may be specific not only to the schemes that include the word mediation in their denomination, but also to other schemes

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ADR schemes for mediation in financial services (1/2)

In the sector of financial services, ADR schemes that include in their denomination the word mediation have been established in the following EU Member States:
Belgium France Italy Luxembourg Portugal Romania Slovakia

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ADR schemes for mediation in financial services (2/2)

Few of these mediation schemes in financial services have been notified to the European Commission (EC)
This situation is similar to the overall trend (irrespective of economic sector), in the EU Member States 750 ADR schemes relevant to business-to-consumer disputes were identified, out of which only about 60% are notified to the EC

In the sector of financial services:

18 mediation schemes were identified out of which only 7 (respectively 26%) are notified to the EC many are in their initial stage of development there is no perceived benefit of the notification Reasons

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Mediation schemes focused on financial services and notified to the EC (1/2)

Name of the mediation scheme
Nature of the scheme Adherence by the industry Funding Average cost for consumers (Euros) Outcome of the procedure DBo B DBo B& C Average duration in 2008 (days)

NbR

CA

BELGIUM Service de Mdiation Banques-Crdit-Placements

Pv V I no x 91180

FRA CE Mdiateur de la Fdration Franaise des Socits d'Assurances Mdiateur du Ministre de l'conomie, des Finances et de l'Industrie
Pv V I no x 31-90

Pb

n/a

n/a

no

31-90

ITALY Conciliatore Bancario Finanziario

Pv V I >500 x 31-90

LUXEMBOURG ACA/ULC Mdiateur en Assurances

n/a n/a n/a no x x n/a

PORTUGAL Centro de Informao, Mediao e Arbitragem de Seguros Automvel (CIMASA) Investor and Mediation Office of the Securities Market Board (CMVM)
Page 36 O (Pb & I) Pb V I & Pb 51-100 x x 91180 n/a

no

Mediation schemes focused on financial services and notified to the EC (2/2)

Source: Alleweldt, F. et al., 2009. Study on the use of alternative dispute resolution in the European Union. Final report. Berlin: Civic Consulting of the Consumer Policy Evaluation Consortium (CPEC), 16 October 2009 Note:
NbR = non-binding recommendation DBoB = decision binding on business only DBoB&C = decision binding on business & consumer CA = consensual agreement mediated by scheme Pv = private Pb = public V = voluntary I = industry O = other n/a = data not available

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Mediation schemes not notified to the EC (in the sector of financial services)
Exist in:
France
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Mdiateur de BNP Paribas Mdiateur de lAssociation Franaise des Socits Financires Mdiateur de la Fdration Bancaire Franaise Mdiateur du Groupe Crdit Agricole Mdiateur de la Caisse des Dpts Mdiateur de la Socit Gnrale Mdiateur de la banque Le Crdit Lyonnais Mdiateur du Groupe Caisse dpargne Union of Banking Mediators Mediation Centre of the Slovenian Insurance Association Mediation Centre of the Bank Association of Slovenia

Romania Slovakia

Outcomes of the mediation schemes

The mediation schemes existing in the EU Member States may be classified according to the outcome of the procedure Mediation: Stricto sensu
refers to solutions based on the consensual agreement between the parties to the dispute.

However, practice shows that mediation schemes may also have as outcomes:
non-binding decisions (recommendations) decisions binding on both parties

Many schemes provide a combination of possible outcomes

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Diversity of schemes and outcomes

Schemes focused on both mediation and arbitration
Example: the Financial Services Complaints Institute (Kifid) from Netherlands the outcome consists in consensual agreement between the parties to the dispute and decisions binding on both parties

Schemes that do not include in their denomination the word mediation and generate a mediated consensual agreement
Example: the ombudsman in the financial service sector Outcomes: binding or non-binding solution and also consensual agreement mediated by the scheme ABSL Service Insurance Ombudsman (in Belgium) Financial Sector Supervisory Committee (in Luxembourg) Insurance Ombudsman and Banking Ombudsman (in Poland) Financial Service Ombudsman (in the United Kingdom)

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Development stage of the ADR schemes that lead to a mediated outcome

At present, the ADR schemes that lead to consensual agreement by mediation are in an early development stage Most of the times, there is no strict frontier between mediation and other types of ADR schemes
Mediation may be provided by both: schemes specialized in mediation schemes focused on other ADR procedures applied in financial services

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Section VI
Mediation in Romania: the regulatory framework

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Regulations
Law relative to mediation
2006: in Romania, the first law on mediation was adopted Law no. 192 relative to mediation and the organization of the mediator profession 2009: this law was modified and completed by Law no. 370

Standard relative to the training of mediators

2007: the Standard relative to the training of mediators was approved by the Council of Mediation 2008: the Council of Mediation has modified the standard (Council of Mediation, 2008).

Code of Ethics and Professional Deontology of Mediators

2008: the Council of Mediation has adopted the code

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Law no. 192/2006 modified and completed by the Law no. 370/2009 (1/5)
Refers to:
the profession of mediator the organization of the activity of mediators the rights and responsibilities of mediators the mediation procedure the mediation of family conflicts and of criminal causes

Article 1
Mediation is defined as a way to solve the conflicts on a conciliatory base, with the support of a specialized third party as mediator, within a framework of neutrality, impartiality and confidentiality and with the free consent of the parties

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Law no. 192/2006 modified and completed by the Law no. 370/2009 (2/5)
The Romanian definition of mediation is in line with the content of the Directive 2008/52/EC However, the definition provided by the Romanian law states the condition of neutrality of the third party that provides assistance to the parties in dispute
This condition is not formally mentioned in the Directive 2008/52/EC Nevertheless, the European Code of Conduct for Mediators that has only an informal value states as requirement the independence of mediators

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Law no. 192/2006 modified and completed by the Law no. 370/2009 (3/5)
Mediator: definition
A person trusted by the parties and that is able to facilitate the negotiations between them and support them to solve the conflict through the identification of a mutually convenient, efficient and sustainable solution

The mediator cannot impose a solution relative to the dispute between parties
The mediation process is based on the cooperation of the parties to the dispute

Profession of mediator
may be practiced only by the person that has obtained the quality of authorized mediator is compatible with the practice of other activities or professions. authorized mediators are registered in the Table of Mediators that is drawn up by the Council of Mediation and published in the Official Journal of Romania, Part I

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Law no. 192/2006 modified and completed by the Law no. 370/2009 (4/5)
Relevance of the law to the commercial disputes
the provisions are also applicable to the conflicts in the field of consumer protection: purchase of defective goods or services non-observance of contractual clauses or warranties provided existence of abusive clauses within the contracts concluded between consumers and economic operators infringement of other rights stipulated by the national or EU legislation in the field of consumer protection

No special provisions relative to mediation in commercial law, even if it comprises special provisions relative to mediation in civil law, in criminal law and family law
In Romania, similarly to the EU legislation, mediation of commercial matters is addressed by a law that also refers to the civil matters Reasons: common characteristics present stage in the development of legislation on commercial litigations

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Law no. 192/2006 modified and completed by the Law no. 370/2009 (5/5)
Council of Mediation
organizes the mediation activity in Romania autonomous legal person of public interest with its headquarters in Bucharest Main responsibilities of the council: promotion of the mediation activity and representation of the interests of the authorized mediators development of training standards relative to mediation based on the international best practices authorization of the initial and continuous professional training, as well as of the specialization training authorization of mediators supervision of the compliance with the training standards in the field of mediation development of the Code of Ethics and Professional Deontology making proposals to improve regulation of mediation

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Code of Ethics & Professional Deontology (1/2)

Approved by the Council of Mediation
reflects the provisions of the Law no. 192/2006

The provisions of the code

meant to guarantee based on their free acceptance by mediators the fulfillment of the mediators mission

The non-compliance with the deontological norms specified by the code

incurs the application of disciplinary sanctions by the Council of Mediation

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Code of Ethics & Professional Deontology (2/2)

General principles to be applied by mediators
freedom of parties to apply to mediation and to make a decision non-discrimination independence, neutrality and impartiality of the mediator trust and moral integrity professional secret, confidentiality conflict of interests fee setting responsibility of mediators incompatibilities quality of the mediation process

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Authorized mediation: evolution stage in Romania

Early stage
The regulatory framework relative to mediation and mediator profession was adopted very recently The profession of mediator was legally created in 2006 Both civil matters and commercial matters are the object of the same provisions relative to mediation and the organization of the profession of mediator

Less likely the development of laws specialized in authorized mediation in the sector of financial services, within the near future
Reasons: the early stage in the development of authorized mediation the existence of a set of legal provisions that refer generally to all the situations of mediation in a non-specialized way make

The practice of mediation in financial services must evolve so that the need for special legal provisions to become significant in order to be addressed

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Section VII
Mediation in the sector of financial services in Romania

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52

Union of Banking Mediators from Romania (1/6)

Established on 11 November 2009
as body specialized in the sector of financial services by some of the authorized mediators from the Table of Mediators

Goal
to promote mediation and to mediate conflicts and litigations from the banking, leasing and insurance sector

Basic principles of mediation applied by the UBMR

legality, neutrality, impartiality, confidentiality and mutual respect

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Union of Banking Mediators from Romania (2/6)

Romanian legal person of private law Professional non-profit body The activities of the UBMR comply with
Law no. 192/2006 modified and completed by the Law no. 370/2009 norms and instructions of the Council of Mediation code of conducts of the:
American Bar Association (ABA) Association for Conflict Resolution (ACR) American Arbitration Association (AAA) European Code of Conduct for Mediators Code of Ethics and Professional Deontology of Mediators from Romania

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Union of Banking Mediators from Romania (3/6)

The activity of UBMR includes among others:
making proposals for the improvement of the regulatory framework relative to conflict mediation in the banking, leasing and insurance system organization of a permanent dialog and good cooperation with institutions such as: Council of Mediation professional associations of authorized mediators Romanian National Bank Romanian Banking Association Romanian Banking Institute commercial banks Ministry of Justice National Authority for Consumer Protection Government of Romania and Parliament of Romania Union of the Liberal Professions National Association of the Romanian Bars Association of Business People Association of Banks Customers Ministry of Public Finance etc.
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Union of Banking Mediators from Romania (4/6)

The authorized mediators that are members of the UBMR may provide mediation services in order to assist in solving conflicts such as:
a) conflicts claimed by customers b) conflicts claimed by banks c) conflicts between bank employees at all levels d) other conflicts that do not refer to the relationships bank employee customer and are under the incidence of the Law no. 192/2006

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Union of Banking Mediators from Romania (5/6)

Examples of conflicts claimed by customers (being either legal or natural persons):
incorrectly calculated interest rates unjustified increase in the interest rates that were supposed to be fixed during the contract period unjustified commissions errors in processing transactions with cards errors in processing online banking transactions incomplete or unclear information unauthorized operations in the accounts banking frauds unjustified registration as bad debtor with the Central of Banking Risks and with the Credit Bureau abusive clauses inserted in the credit contracts no communication from the bank relative to the increase in the interest rate changes in the clauses of the convention without the consultation and agreement of contractual parties and without registration in an additional act signed by both parties damages for customers due to the late processing of money orders etc.
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Union of Banking Mediators from Romania (6/6)

Examples of conflicts claimed by banks
non-payment with ill will by banks customers of their money debts to the bank late payment after debt deadline by customers unjustified refusal of the customer to pay the interest and legally calculated penalties threatening, insulting, slandering or striking of bank employees by the debtor customers denigration of bank in mass-media by customers registration of unjustified complaints relative to banks with the National Authority for Consumer Protection and National Bank of Romania

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Romanian Banking Association (1/2)

Recognized the need for ADR schemes in the field of financial services Background study relative to the establishment of a bank ombudsman in Romania
suggested that an independent and effective Bank Ombudsman scheme be established modeled after the European schemes analyzed by the study December 2006: presented to the SPI Committee July 2007: the documents approved by the SPI Committee

In 2008:
the National Bank of Romania approved the proposal of the RBA relative to the creation of mediator bancar (banking mediator) banking mediator will give verdicts, establishing whether the customer or the bank is right, in the case of a conflict

The RBA registered the brand Mediatorul Bancar with the State Office for Inventions and Trademarks (SOIT)

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Romanian Banking Association (2/2)

The text of the feasibility study
was elaborated in English referred in its entirety to the establishment of a banking ombudsman

All the information provided to the mass-media channels as well as the trademark registered with OSIT use the term mediator bancar as equivalent translation to financial ombudsman
In fact, the project of RBA refers to a banking ombudsman, not to a banking mediator

The two concepts belong both to the ADR area

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Ombudsman vs. mediator (1/6)

Both act as third parties Experts make a clear distinction between ombudsman and mediator
The major reasons: a) role b) type of outcome c) neutrality, impartiality and confidentiality d) choice of a mediator e) research

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Ombudsman vs. mediator: a) role (2/6)

Ombudsman
Role: to identify a solution under the form of a decision that is binding to the tradesperson the consumer that is dissatisfied with the decision may go to court

Mediator
Role: to assist parties to identify themselves a mutually beneficial solution by dialog and cooperation The mediator does not formally express and impose own opinion on the possible solution to the dispute According to article 4(2) of the Law no. 192/2006 relative to mediation and to the profession of mediator and modified and completed by the Law no. 370/2009: the mediator does not have decision power relative to the content of the agreement that will be reached by parties, but may guide them to verify the legality of agreement (according to article 59)

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Ombudsman vs. mediator: b) type of outcome (3/6)

Mediator
assists parties in solving the conflict by means of obtaining a solution that is: mutually beneficial to these parties efficient sustainable Article 1(2) of the law Law no. 192/2006 modified and completed by the Law no. 370/2009

Ombudsman
is not responsible to ensure such characteristics of the outcome

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Ombudsman vs. mediator: c) neutrality, impartiality and confidentiality (4/6)

Mediator
neutrality, impartiality and confidentiality are conditions to be fulfilled by mediators According to article 1 of the Romanian Law no. 192/2006 modified and completed by the Law no. 370/2009

must lead the mediation process in an impartial way and ensure a permanent balance between parties Article 30(2) of the Romanian Law no. 192/2006 modified and completed by the Law no. 370/2009 the obligation to keep the confidentiality of the information during the mediation activity as well as of the documents elaborated or submitted by parties during the mediation process, even after the cessation of his/her function Article 32 of the Romanian Law no. 192/2006 modified and completed by the Law no. 370/2009

Ombudsman (as registered by RBA)

a financial ombudsman is a person that has a relationship with a bank, for example as employee, collaborator or member of an association of banks may not be the mediator of a banking dispute from the perspective of a mediator, the conflict of interests should be avoided, in order to ensure a professional and ethical assistance to the parties
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Ombudsman vs. mediator: d) choice of a mediator (5/6)

The parties may freely choose themselves the mediator
the mediator is not appointed by an institution or an association

The mediation is based on the trust placed by the parties in the mediator

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Ombudsman vs. mediator: e) research (6/6)

Mediator
does not make research relative to the dispute, like an ombudsman

Ombudsman
makes research

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RBA & UBMR (1/2)

If no changes will be made in the terminology used (more specifically in the translation of the term ombudsman from English to Romanian) by the RBA specialists, there is a lot of room for errors among customers and all those who are not very knowledgeable of ADR The president of RBA estimated that until the end of 2008, the banking mediator may become functional
However, the intentions of RBA and the efforts deployed to set up a mediation entity did not materialize until December 2009 when the UBMR was created

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RBA & UBMR (2/2)

18 January 2010: the board of directors (BoD) of the RBA has published a twoparagraph press release on its site
relative to the own project relative to mediation and to the UBMR the BoD acknowledges the customers (natural or legal persons) of the credit institutions, as well as the media channels, that: the recently created UBMR is not the result of the project supported by RBA and by the banking community RBA continues its efforts to set up an entity with mediation responsibilities in the banking field that will be accepted and recognized by the banking community the level of professionalism and knowledge of the banking activities of the entity planned by RBA will represent a warranty for a competent and pertinent analysis of the causes to be mediated and will ensure correct decisions that will meet the expectations of those who apply to the services of this entity.

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Mediation clause
At present, almost all commercial contracts do not include a mediation clause The Center of Mediation of the Commercial Disputes with the Chamber of Commerce and Industry of Romania and of Bucharest
has suggested two possible formulations of such a clause: a) the former refers to a contract Every misunderstanding, dispute or divergence relative to the conclusion, interpretation, implementation or cessation of the present contract will be submitted to the mediator (name of the mediating person/body) ... b) the latter refers to an extra-contractual relationship Every misunderstanding or dispute relative to the existence, fulfillment or cessation of the extra-contractual obligation of commercial nature for at least one of the parties, will be submitted to the mediator (name of the mediating person/body) ...

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The right question

Which should be chosen out of the two ADR schemes?
or

How both types of ADR (by mediator and ombudsman) may be effectively implemented to benefit both consumers and the institutions providing financial services?

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Section VIII Conclusions

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Conclusions (1/3) ADR schemes

The need for ADR as an alternative to judicial settlement of consumer disputes
especially in the case of cross-border transactions fact reflected by the development of various types of ADR bodies and procedures in the EU Member States

Presently, the ADR schemes are in an early development stage in the EU in general and in financial services in particular
Reasons: ascending trend in the ADR field, consisting in an increasing number of public and private schemes in the Member States uneven development of ADR among Member States lack of a standardized approach relative to the types of schemes and outcomes relatively general EU regulations that established mostly the principles of ADR

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Conclusions (2/3) Mediation in financial services

Evolved as an ADR scheme several EU countries
Mediation schemes that are notified to the EC exist in Belgium, France, Italy, Luxembourg and Portugal exist in France, Romania and Slovakia Non-notified schemes

Outcomes
schemes that are not focused on mediation but provide the outcome of a consensual mediated agreement, like in Belgium, Luxembourg, Netherlands, Poland and the United Kingdom from a broad perspective, mediation and consensual agreement by mediation are possible in ten Member States of the EU, in the field of financial services compared to the broader concept of ADR (that incorporates more procedures than mediation and that is in the early development stage in the EU), mediation in the financial service sector has reached only an emerging stage in the EU

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Conclusions (3/3) Romania

In Romania, mediation in financial services is just in a pre-emerging stage
Reasons: until 2009: absence of any ADR schemes specialized in financial services since November 2009: there is only one mediation scheme dedicated to the financial service sector However, in the absence of mediation schemes, numerous complaints relative to financial services were submitted by consumers to the National Authority for Consumer Protection (NACP)

No law especially dedicated to the mediation in the sector of financial service

only a law that refers generally to the mediation of every type of dispute/conflict/litigation the law comprises special provisions relative to mediation in civil, criminal and family law, but does not include a special section relative to mediation in commercial law.

Slight conflict between the two main initiators of mediation schemes

UBMR & RBA

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Section IX Recommendations

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Recommendations (1/3)
Firstly, specialists and decision-makers must avoid placing limitations in the path of the diversified development of ADR schemes in financial services
The significant number of complaints on financial services received by NACP is a reason to promote various ADR schemes, among which range mediation

The EU experience shows that in the early development stages, a standardized approach may hinder innovativeness and the ability to identify solutions that are better suited to the customer needs for quick, effective, affordable and impartial settlement of disputes
In this stage, Romania should encourage the development of different ADR techniques and bodies, in general and in financial services specifically.

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Recommendations (2/3)
Secondly, the promoters of the various ADR schemes in financial services should make a difference between ombudsman & mediator
should also acknowledge customers and mass media about the content of this difference

Thirdly, the experimentation of different ADR schemes may be beneficial in order to test and further improve them to better fulfill their role
the question is not which ADR scheme is the best, but how to develop each scheme in order to provide consumers with a reliable alternative dispute resolution

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Recommendations (3/3)
Fourthly, another recommendation is to organize further in-depth research able to reveal the effectiveness of the various ADR schemes including mediation in the financial service sector
a perspective of both Romania and other EU Member States potential research objectives: effectiveness of mediation and other ADR schemes applied in the financial service sector in the EU Member States and in Romania satisfaction of consumers relative to the outcomes of each scheme duration and costs for consumers outcomes and activities specific to each type of scheme

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