Upcoming draft act on protection of the rights of consumers on the financial market
Following the Concept of consumer protection in the field of financial services, in the beginning of June 2008 the Slovak government approved the matter-of-fact objective of the Act on protection of consumer rights on the financial market.
Framework of the new legislation
The objective of the draft is to mitigate information and professional asymmetry on the financial market, in other words, to provide for a certain extent of balance between the protection of the interests of the financial institutions and fair competition on the one hand and protection of the consumer of financial services on the other hand.
The Act envisages the establishment of a complex institutional system dedicated to the protection of the consumer on the financial market in part by way of the establishment of the Financial Ombudsman Bureau and Financial Education Academy, as well as by way of incorporating existing institutions into this system of protection, particularly the Deposits Protection Fund and Investments Guarantee Fund. For the future, the establishment of other funds is contemplated, such as the establishment of a Fund for Retirement Insurance. This entire system shall be headed up by the Council for Protection of Consumer on the Financial Market.
The draft Act introduces a more precise specification of the powers, organisational structure and financing of the individual bodies and institutions of this protection system, as well as the manner of their control. With respect to the contemplated manner of financing, the application of solidarity is preferred: i. e. a certain fraction from the amount of the fee for a financial service, which is paid by the consumer to the financial institution, would be deducted in favour of the bodies and institutions of the consumer protection on the financial market, or alternatively a surcharge would be added to the fee for a financial service. Not only consumers, but it would also be mandatory for the so-called corporate clients of the financial institutions to participate in such co-financing.
At the same time, from a mediumterm point of view the reconsideration of financing will be contemplated, as well as the operation of the Deposits Protection Fund and Investments Guarantee Fund once they have been incorporated into the new protection system of the consumer on the financial market.
Financial Ombudsman Bureau
The financial ombudsman shall examine client complaints, settle and decide disputes between clients and financial service providers in the field of offer, distribution and/or intermediation and provision of financial services.
The competence of the ombudsman shall include an examination of excessive conditions found in consumer contracts and the related issuance of the sanction decisions, including the possible exclusion of such excessive conditions from the contract.
Complaints to the ombudsman could be filed by clients of the financial institutions – consumers, or professional associations of consumer protection, however, only after they were unsuccessful with the complaint being filed with the respective financial institution. The financial institutions being subject to supervision shall include not only those that are subject to supervision by the Slovak National Bank, but also non-banking institutions that provide consumer credits, leasing companies etc. A symbolic fee for the complaint addressed to the ombudsman in the amount of EUR 5 is assumed.
No obligation is expected on the part of the consumer to address the ombudsman. However, the consumer could, in an autonomous option, address the ombudsman even if his complaint could be solved by the court or in arbitration proceedings or should he already have initiated such means of a solution. The decisions of the ombudsman shall be subject to scrutiny of the court.
Selected rights of consumers on the financial market
The draft Act assumes an arrangement of certain rights of consumers on the financial market, such as:
- the right to be provided with a financial service with full due diligence,
- the right to general protection from wrong, unethical and unfair performance on the part of the financial institutions,
- the right to complain for the wrong performance on the part of the financial institution as well as the right to arrangement of such a complaint including the right to a fast and effective arrangement of the dispute arising from the contractual relationship,
- the right to equal treatment,
- the right to compensation for damages which are demonstrably incurred in connection with wrong, inappropriate or illegal performance on the part of the financial institution. Under the new legislation, financial institutions shall provide services in accordance with the principles of fair business and with full due diligence, and in addition shall:
- follow the rules of the contact with clients pursuant to other legal acts (Act on Banks etc.),
- offer or intermediate financial services which meet in the highest extent the needs and intentions of the consumer and
- fulfil the informational obligations relating to provided financial services.
The Act shall further determine the extent of the minimum informational obligations of the financial institutions towards the consumers, the regulations for the promotion of financial services and unacceptable forms of promotion by way of placing a ban on deceptive and unethical advertising. The Act shall more precisely establish and define what will be considered as unethical performance, unfair business practices, aggressive practices and deception of the consumer when providing financial services.
Issues concerning the proposed legislation
The mere fact that the institutionalised system of consumer protection on the financial market shall be financed primarily by the consumers themselves is and will be subject to fierce criticism of the proposed legislation. Moreover, the proposed composition of the Council for Protection of Consumer on the Financial Market does not fully guarantee separation of this body from the system of political power.
In addition, the Slovak Bank Association has criticized the establishment of the Financial Ombudsman Bureau, particularly due to the fact, that a Banking Ombudsman in connection with this association has already been in existence since the last year, which deals with client initiatives from the standpoint of the Ethical Codex of Banks, i. e. that is from an even stricter point of view than that of being in accordance with the legal regulations.
| Source: |
JUDr. Rastislav Kuklis, Attorney-at-Law, Weinhold Legal |
Obsah celého čísla -
august/september 2008
Prečítajte si celé číslo novín Development Press vo formáte pdf (budete presmerovaný na internetové sídlo novín)
Sekciu pripravujeme v spolupráci s MEDIA DIRECT, s.r.o., vydavateľom novín Development Press.
(Periodicita novín je dvojmesačná z dôvodu charakteru informácií publikovaných v novinách)
Zverejnené články je zakázané kopírovať, šíriť, upravovať, pozmenovať, publikovať bez predchádzajúceho písomného súhlasu autora článku, ktorý plne zodpovedá za obsah a pravdivosť poskytnutých informácií.
Áno
Menové kurzy ECB
Ďalšie zaujímavé správy
Správy v anglickom jazyku