The General Council of the Judiciary (CGPJ) has criticized this Thursday the functions of the new Authority for the Defense of Financial Clients, since it entails “the invasion of the space that the Constitution reserves exclusively for the Judiciary”, states the governing body of on Thursdays in a statement. The plenary unanimously approved the bill for the creation of the authority that will try to resolve disputes between financial institutions and users out of court.
In the report, the judges explain that the Public Administration is not part of the relationship between banks and their clients. “The Administration cannot create administrative instances to coercively resolve disputes between individuals governed by private law,” says the text. It also criticizes that the rule includes the possibility of requesting the collaboration of other bodies or public or private entities when the volume of claims requires it. “It is radically inadmissible that (…) can also be assigned to any public or private body or entity,” he adds.
The Government project to create this new authority for the defense of financial clients will unify the existing claims services of the Bank of Spain, the National Securities Market Commission (CNMV) and the General Directorate of Insurance and Pension Funds (DGSFP). . It will assist banking users, as well as in cases related to investment and insurance companies. Originally, it was born with the aim of relieving the courts of the numerous cases that it accumulates, although now the CGPJ criticizes it harshly.
The authority may intervene when there are claims from customers who have not been satisfied with the response of the companies’ customer service. It will be free for users (entities will have to pay a fee of 250 euros for each claim against them) and its resolutions will be binding on the financial institution when the amounts claimed are less than 20,000 euros. The First Vice President of the Government, Nadia Calviño, has highlighted on several occasions the importance of this body in guaranteeing the protection of financial consumers. The process will be relatively simple and you will not need a lawyer or solicitor. Thus, the Executive intends to encourage financial institutions themselves to resolve citizen conflicts “in an agile manner.”
The financial sector, on the other hand, considers that there will be a counterproductive effect with the creation of this body. In addition, he believes that there may be a perverse incentive in the obligation to pay a fee regardless of whether the resolution agrees with the client or not. In fact, the governor of the Bank of Spain, Pablo Hernández de Cos, also made reference to these possible consequences in his intervention in the Economic Affairs commission of Congress.
Hernández de Cos said that the imposition of the rate encourages a faster resolution, which he considers positive. “In this way, it is intended to encourage entities to resolve their customers’ claims in a friendly manner, before they go to the Authority.” However, there is a less friendly face: “This system could cause any dispute for an amount less than the amount of the fee to be accepted by the entity regardless of whether or not its behavior has been adjusted to the regulations and good practices , since continuing the procedure before the Authority would always be more expensive. Ultimately, it could also generate an increase in conflicts between customers and financial institutions”.
Expanded Financial Client
Hernández de Cos then recalled that the Council of State, in its opinion on the draft, pointed to the lack of proportionality in the designed system. “To avoid these potential problems, other alternatives could be explored, such as requiring the collection of the rate based on the number of claims against an entity, and not merely on those processed,” the governor proposed in Congress. The report of the Judiciary, on the payment of the rate, says that “some of the principles that govern our tax system” are put at risk. And he adds that “it would also be necessary to adapt the amount of the fee to the amount of the claim”, so that there are no cases in which it exceeds the amount under discussion.
The opinion of the CGPJ maintains that the definition of the financial client is too broad and offers excessive protection in some cases. “The definition that the draft makes of the financial client —in which it includes both natural persons (acting as consumers or professionals) as well as legal persons and entities without legal personality, granting them all the same level of protection— is exorbitant “adds the agency’s statement.
The report also criticizes the definition of unfair terms. According to the Judiciary, the text of the norm does not take into account the subjective dimension of the characterization of certain contractual clauses as abusive, where the personal circumstances of each case judged also intervene. In other words, a mechanical translation cannot be done for the rest of the clients. The opinion also does not agree that the resolutions of the new authority “will put an end to the administrative process and will not be subject to appeals for reinstatement.”
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