In 2020, ABDRC celebrated their fifth anniversary. During all this time, ABDRC brought along a new paradigm for both banks, and consumers. Conciliation via ABDRC should become the alternative of choice for a consumer when they need to address a problem with the traders in the financial and banking system, to the detriment of the actions brought before courts or other litigation-based methods. The active involvement of both parties in contract negotiation, facilitated by an independent expert, the conciliator, has started to shape a shift in the past and still current perception of the contracts and commercial services, or of the banking services.

I.         About ABDRC Establishment

1. The Alternative Banking Dispute Resolution Centre (ABDRC) is an independent non-governmental apolitical, not-for-profit legal entity of public interest established under the Government Ordinance no. 38/2015 on alternative resolution of disputes between consumers and traders, which transposes at domestic level Directive No 2013/11/EU on alternative dispute resolution (ADR) for consumer disputes, as well as Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution (ODR) for consumer disputes.

As between the consumer and the bank, alternative dispute resolution (ADR) sets out the best possible framework for the dialogue between the parties, and fosters running of reliable analyses on the aspects reported by consumers, in view of identifying and addressing, as applicable, the deficiencies and the potential incorrect practices in the work of professionals.

Additionally, further to transposition by Romania of the Payment Services Directive/PSD2, the following laws were passed:

• Law no. 209/2019 on payment services, and amending certain items of legislation

and

• Law no. 210/2019 on the issuing of electronic money,

the subject-matter jurisdiction of ABDRC was extended so as to cover a new category of subjects, namely “users that are legal entities“, considering their capacity of users of payments services, and/or the violation by the issuers of electronic money of the legal provisions laid down in the regulations above.

2. ABDRC’s work is render at two levels:

• administrative – organization and functioning of ABDRC as legal entity;
• operational – organization and performance of the alternative dispute resolution activity.

The aim of this keeping these two lines of work separated is to reflect the independence of the Conciliators’ work from the administrative matters of ABDRC.

II.         Administrative activity of ABDRC

1.   Activity of the Steering Board

The ultimate duty of the Board, the work of which is rendered under the Regulation for ABDRC’s Organization and Steering Board’s Functioning, is to steer and provide oversight of the administrative activity of the Centre. Thus, the members of the Steering Board have powers and duties in connection with approval and amendment of the resolution procedures, approval of conciliators, approval of the income and expenditure budget, etc.

The Board members are not involved in any operational activity of the Centre (the review and resolution of the disputes being reserved exclusively to conciliators), and their task is to see that ABDRC has available sufficient resources to carry out its activity in an efficient and independent manner.

Highlights of the Steering Board’s activity in 2020:

• drawing up and approval of the two ADR Procedure Regulations for legal entities further to extension of the ABDRC’s scope of work to cover also for legal entities that access the services regulated by Law no. 209/2019 and Law no. 210/2019;
• ordering adaptation of all activities (conciliation, meetings of the Steering Board, communication, employees’ presence in the office, meetings with traders/collaborators, etc.) to the current COVID-19 pandemic context, in appropriate security conditions;
• continuation of the administrative litigation proceedings registered with Bucharest Court of Appeal under case number: 6047/2/2018, concerning the challenge of ABDRC against the Decision no. 2377/DA/31.05.2018 issued by the Ministry of Economy on entering ABDRC in the list of ADR entities in Romania – the proceedings are pending before this court;
• resuming/following up on the efforts to engage the NBFIs in the activity of the Centre;
• approval of the financial statements executed as at 31 December 2019;
• performance/development of the communication activity via different channels adapted to the current COVID-19 pandemic context, in appropriate security conditions;
• the end of the 5-year offices of the members who sat in the first Steering Board;
• arranging for the institutions represented in the Steering Board to issue the new 5-year mandates for their new representatives therein;
• election of the independent member of the Steering Board for a 5-year term of office;
• election of the President of the Steering Board of a 1-year term of office;
• reviewing the draft 2021 budget and approval of ABDRC’s 2021 budget (2021 IEB).

2.  Communication, promotion, information and financial education

Communication takes place across the following levels (according to ABDRC’s communication strategy):

• communication with banks and NBFIs (traders);
• communication with consumers;
• communication with stakeholders;
• holding of work meetings with conciliators, whenever these are necessary, as part of the process of updating/reviewing the Regulation of the Procedural Secretariat and the ADR procedures, as the amicable dispute resolution work advances;

2.1. ABDRC’s Communication and Promotion Activity

Communication with, and information of consumers and traders about ABDRC take place via the following channels:

• communication via the traditional media channels (TV, Radio, Written Press, Online, Blogging);
• communication via own channels: Website, Facebook, LinkedIn, YouTube, Instagram;
• organization of/participation in conferences, seminars, debates (also online), etc.;
• communication via commercial banks (online and offline: fliers, posters, stickers, candy crayons sent to the banking agencies, video productions);
• communication via the National Authority for Consumer Protection (at central level and through the County Commissariats);
• communication via consumer associations.

2.2. Information and financial education

Consumer information about ABDRC and their financial education is performed via the following channels:

• Communication via the traditional media channels (TV, Radio, Written Press, Online) by campaigning the work of ABDRC, the cases resolved and the benefits of conciliation in news, talk-shows, financial education media projects, public awareness campaigns, etc.;
• Communication via own channels: Website, Facebook, YouTube, LinkedIn, Instagram;
• Consumer information campaign run via Finzoom.ro – it features articles and information about ABDRC and recommendations to consumers;
• Consumer information campaign run via Conso.ro – it features articles about ABDRC, a guide with suggestions and practical advice about the work of the Centre and links from the website Conso.ro directly to the consumer application on csalb.ro;
• Consumer information campaign run in partnership with Bancherul.ro – it features a special section dedicated to ABDRC on this website and on the Financial Education page;
• Consumer information and education campaign organized as two competitions with bloggers that enjoyed participation of more than 40 content creators who wrote about ABDRC and promoted the work of the Centre in their social media channels;
• Call-centre activity, reporting, training, operation of the ABDRC website chat, message adaptation, voice-over;
• Organization of/participation in conferences, workshops, etc. (online due to pandemic);
• Financial education through the ABDRC conciliators: press coverage to promote the work of the Centre further to issuing of press releases;
• Videos (distributed via the media and ABDRC’s own channels) where Conciliators advise consumers about how a negotiation is conducted, limits of negotiation, negotiation principles, etc.;
• Provision of information via commercial banks:
• press-releases involving financial and banking institutions;
• participation of bank representatives in interviews and conferences;
• information materials (fliers, posters, stickers, candy crayons) sent to the banking agencies;
• distribution of videos intended for e-learning/training/webinars to banks;
• distribution of videos and banners to banks to be shown in agencies and on ATMs;
• promotion in media campaigns, stand-alone communication projects and online presence of commercial bank representatives encouraging consumers to pursue conciliation;
• Communication via the National Authority for Consumer Protection (at central level and through the County Commissariats) and the Consumer Protection Association.

3.  Other administrative activities

3.1. Ensuring observance by the Centre of the personal data protection rules

ABDRC has taken the following technical and organizational measures to protect natural persons in terms of personal data processing further to the coming into effect (in May 2016) of the European Regulation No 679/2018 the provisions of which apply as of 25 May 2018:

• Training for the in-house/employed DPO (the Data Protection Officer);
• Specialty advice on the baseline and the further steps to be taken to achieve compliance;
• Ensuring adequate security for the data and information of any kind held by ABDRC, as well as compliance with the backup and disaster recovery requirements by putting in place the necessary systems (Antivirus, SOC – Security Operations Centre, DLP – Data Loss Prevention etc.);
• Writing/implementing the internal regulations and delivery of training thereon to the Centre’s employees and collaborators;
• Drawing up the documentation required to obtained the processing consent of the consumers who access the services of ABDRC, as well as the consent of all employees and collaborators of the Centre;
• In the context of the sanitary crisis and of the shift to telework, a VPN solution was implement (as early as the onset of the state of emergency in March 2020) with a view to keeping secure the work equipment and materials for each employee and collaborator of ABDRC (via connection to the secured Internet network of the Centre). Compliance of employees/collaborators with the new telework requirements is permanently reviewed.

3.2. Call-Centre

• Collaboration with the company that deals exclusively with the interaction by phone between ABDRC and consumers started in 2019. Linked also with the efficient promotion of the Centre, we noticed that the average number of calls per day has increased to double or even triple during the periods that immediately followed the issuing of press releases/media-covered events;
• The live-chat feature on ABDRC website, operated by the same company that operates also the call-centre, has been in place since February 2020;
• The call-centre is used also to collect several categories of information about the subject-matter of the consumers’ enquiries, and/or about the sources they found about the Centre fromà. This data is used including in our communication actions by narrowing-down the scope of the promotion efforts to the most relevant/efficient means of conveying information about the availability and services of ABDRC.

III.         Operational activity of ABDRC

The operational activity of ABDRC is detailed in the Annex which is an integral part of this document.

Effective January 2020, ABDRC has extended the ADR scope to cover also for legal entities on matters in connection with payment services and issuing of electronic money, further to transposition in Romania of the Payment Services Directive/PSD2 under Law no. 209/2019 on the payment services and amending certain items of legislation, and Law no. 210/2019 on the issuing of electronic money.

IV.          Conclusions

Preliminary considerations:

The ABDRC services continue to be accessed by increasingly more Romanian consumers.

The benefits of conciliation:

• avoidance of court proceedings, and continuation of the contractual relations between the parties;
• short case settlement time (less than 90 days);
• expertise of conciliators (the members of the Body of Conciliators are individuals with at least 10 years of expertise in the financial and banking area, and are well known for their professional and educational background and reputation), and
• no charges for consumers;

are strong arguments for both the consumers, and the financial and banking institutions involved in these negotiations, particularly during economically difficult time as 2021 is expected to lay ahead.

In this context, the following are key findings about the first five years of operation:

• the need to further raise awareness of consumers, with the support of traders, of the benefits of accessing the services provided by ABDRC;
• the need to determine/convince consumers and traders to opt for (negotiation-based) alternative dispute resolution methods, avoiding the contentious way, in court proceedings;
• the need to determine and put in place systematic/concerted communication techniques to promote the Centre and capture the interest of consumers, and create a fostering environment among consumers;
• the NBFIs need to become more open to entering the conciliation procedure, and both the banks and the NBFIs should reduce their number of applications unreasonably closed;
• both parties have been found to prefer the procedure with proposed solution/conciliation, to the detriment of the procedure with enforced solution/arbitration;
• as of Q1 2020, ABDRC can also address conciliation applications received from legal entities related to payment services and issuing of electronic money; we expect a rather difficult start for conciliation involving legal entities, as it happened also back in 2016 when we started with natural persons; Nevertheless, the economic conditions expected to be seen in the aftermath of the pandemic would render necessary, if not even critical, resolution of such cases outside the courts of law, with significantly lower financial and time efforts.
• ABDRC has proven an extraordinary capacity to adapt its work to the requirements of the authorities, as follows: more than 90% of the Centre’s work was moved online, and conciliators continued to remotely facilitate the negotiations between consumers and banks/NBFIs (via email and over the phone). Additionally, the IT tool (which went live in July 2018, and is used to manage the applications and case directly on the ABDRC website) has proven its efficiency during this time when the Centre was able to continue to smoothly mediate the relation between consumers and traders;
• the support of the Ministry of Economy (as competent authority) is required to achieve cross-border cooperation and registration of ABDRC as European online platform (ODR – Online Dispute Resolution) and with FIN-NET.

In 2020, ABDRC made a number of recommendations to banks:

1. The consumer applications referred by ABDRC to banks should be reviewed by the credit institution with the amount of flexibility required for the parties to reach an agreement. In this regard, we recommended that, by the end of 2020, the number of applications closed on unreasonable grounds should drop below 20% of the total number of applications referred to the bank. Essentially, efforts has been constantly employed to bring this performance indicator below 10. In 2020, the average share of applications closed on unreasonable grounds across the entire banking system was 28% of the total number of applications received by ABDRC. For NBFIs, more than 70% of the applications are unreasonably closed. There are also banks which observed an above-average ratio, meaning their closure percentage was below 10%.

2. Am important share of the closed applications were rejected for valid reasons. For instance, in years 2018-2020, 937 applications concerned the Credit Office, of which, 535 only in 2020. It should be recalled that most of the applications concerning the Credit Office, the First House programme or assigned loans are rejected because, on a case-by-case basis, these are governed by a special piece of legislation which leaves but limited, if no room at all for negotiation.

3. In the negotiation stage, an agreement can be reached when the bank shows a genuine willingness to negotiate, and the solution they come up with is fair. In other words, a balance needs to be struck between the consumer’s claims and the concessions made by the bank.

4. The banks were also recommended to foster engagement of the ADR departments with the officers in charge from the Complaints, Customer Services, Risk, and Commercial Departments. In this regard, we the review of the contracts’ performance should be conducted prevailing in terms of the ability of consumers to continue with their respective contracts (striving to have their payment capacity improved by rebalancing), and not only in terms of their lawfulness, because this is not at all what consumers challenge.

5. Another recommendation was aimed at rendering more flexible the mandates granted to the bank representatives involved in negotiations so as to allow the bank, further to negotiations within ABDRC, to make an offer that is better than the bank’s current commercial offer.

6. The banks were recommended to settle amicably as many of the applications, which they would have otherwise unreasonably rejected, as possible, in particular in less complex cases. Therefore, when it comes to choosing between refusing conciliation and negotiating directly with consumers in the bank’s premises, the latter should be the alternative of choice.

7. It is important that banks accept also applications of their corporate clients in connection with payment services and issuing of electronic money. As of 2020, ABDRC can provide conciliation services also in connection with such cases brought up by legal entities.

Final conclusions:

• During its first five years of operation, ABDRC has proven that they propose a new paradigm for both banks and consumers;
• Conciliation via ABDRC should become the alternative of choice for a consumer when they need to address a problem with the traders in the financial and banking system, to the detriment of the actions brought before courts or other litigation-based methods;
• The active involvement of both parties in contract negotiation, facilitated by an independent expert, the conciliator, has started to shape a shift in the past and still current perception of the contracts and commercial services, or of the banking services;
• The ultimate gain of ADR procedures managed via ABDRC is that these made possible mutual understanding and trust between the parties by rebalancing their contractual relations;
• The 1,500 cases concluded with the parties reaching an agreement proves that a contractual relation readjusted further to negotiation can be functional;
• Under no circumstances, the relation between a bank and a consumer is antagonistic, and the problems reported by consumers are understood and accepted by the bank when they are objective/justified and reasonable;
• By streamlining the conciliation mechanisms, rendering more flexible the position/attitude of the banks on the requests received from their clients, and consumers making realistic and balanced claims, the number of solutions agreed-upon in the conciliation procedures will constantly grow;
• Last but not least, the choice of conciliation should become as known and used for legal entities as for natural persons. When the disputes related to payments and issuing of electronic money are addressed in ABDRC, the business environment and the mutual trust between vendors of such services and companies or public institutions are improved;
• With the involvement of all stakeholders (the National Bank of Romania, the Romanian Banking Association, the National Consumer Protection Authority, consumer associations), this project can advance, and the trust benefits built-up between consumers and banks/NBFIs will show in time.

REPORT

on the operational activity of

ALTERNATIVE DISPUTE RESOLUTION

as at 31 December 2020

The Alternative Banking Dispute Resolution Centre started its alternative dispute resolution operational activity on 1 March 2016.

Until 31 December 2020, as many as 3,713 written applications, and 5,567 phone calls were received from consumers. Of these, 2,498 of the written applications were found compliant, 325 were incompliant, while 890 were various requests. Distribution of the complete casefiles to conciliators is done randomly, depending of the availability and workload of each conciliator.

Consumers used the following means to submit their applications (for the 2,498 compliant applications: 1,922 compliant applications concerning banks + 576 compliant applications concerning NBFIs):

For Banks:

Natural persons:

• 1,363 were submitted online, via ABDRC website;
• 444 were emailed;
• 74 were mailed;
• 41 were brought to, and registered by consumers with the office of ABDRC.

Legal entities:

• 23 were submitted online, via ABDRC website;
• 3 were emailed;
• 1 was mailed;

For NBFIs:

• 467 were submitted online, via ABDRC website;
• 77 were emailed;
• 18 were mailed;
• 14 were brought to, and registered by consumers with the office of ABDRC.

The applications received from consumers covered the following topics:

• Problems in connection with credit products:

• Refunds (of fees/commissions, interest);
• Reduction of loan principal/debt/instalment, or writing off overdue amounts;
• Rescheduling/refinancing/staging-out;
• Agreement renegotiation/rebalancing (including for hardship);
• Finding a solution to address the problems (in general);
• Finding a solution to address the problems generated by the pandemic;
• Conversion of the loan currency;
• Problems with insurance policies (bancassurance);
• Interest recalculation;
• Payment commitments;
• Maturity acceleration;
• Credit Office (deregistration from CO);
• Removal of certain clauses.

• Operational problems:

• Problems with operation of the ATMs (including refunds);
• Problems in connection with wire transfers and refunds of transaction fees;
• Refunds in case of processing errors;
• Recovery of amount wrongly transferred by consumers (internet banking);
• Provision of clarifications about calculation of the amounts withdrawn by banks from the credit card account;
• Other card-related problems (cancellation/name change);
• Problems in connection with the exchange rate and interests charged when using the cards abroad;
• Problems regarding inter-banking transfers.

• Problems related to other types of activities:

• Problems in connection with forced execution (suspensions/stays of proceedings);
• Requests to be issued documents (repayment schedules, statement of accounts, etc.);
• Refunds of garnished amounts;
• Mortgage deregistration;
• Stay of instalment payment (pursuant to the Government Emergency Ordinance no. 37/2020).

Qualification of the 2,498 compliant applications:

For banks:

• 547 turned into cases (18 cases from applications submitted in 2019);
• 97 in screening phase (in the end of 2020);
• 260 settled amicably after referral to ABDRC;
• 1,040 closed.

For NBFIs:

• 22 turned into cases;
• 226 in screening phase (in the end of 2020);
• 63 settled amicably after referral to ABDRC;
• 265 closed.

Applications are closed when traders refused the settlement of the disputes via the ADR procedure, and reasons for closing fall within several categories:

• Objective (main) reasons – the application concerns:
  • deregistration of entries from the Credit Office;
  • “First House” loans;
  • assigned claims;
  • the state premium under saving-credit contracts.

• Reasons related to consumers:
• selection of a trader the business of which is not regulated by the National Bank of Romania;
• selection of a trader they don’t have commercial relations with;
• the information/documents required for resolving the application have not been supplied.

• Other reasons:
• pending court proceedings;
• forced execution procedures have already been initiated;
• traders made several offers, but all of them were turned down by consumers (before approaching ABDRC), and traders maintain their point of view in the initial answer sent to consumers.

A total of 323 applications (97 concerning banks and 226 concerning NBFIs) are in screening phase (documentation is reviewed for completeness, information and supporting documents are requested).

Qualification of the 569 cases undergoing the procedure with proposal of a solution:

For banks:

• 5 preliminary cases;
• 66 cases in the phase of discussions with the parties;
• 353 resolutions;
• 96 reports;
• 23 cases in which one party withdrew from the procedure;

Qualification of the 22 cases undergoing the procedure with proposal of a solution:

For NBFIs:

• 0 preliminary cases;
• 5 cases in the phase of discussions with the parties;
• 6 resolutions;
• 11 reports.

Further to a review of the types of applications received by the ADR Centre, the claims of consumers, and the reasons of the disputes, the Steering Board of ABDRC can decide to improve the ADR procedures so as to make them easier to understand and apply by consumers, traders and conciliators. Another objective pursued was adaptation of the procedures to the types of existing disputes: the fast communication flow used to far with a number of traders.

Statistical/aggregate information as at 31 December 2020 is available in the charts below.

The WEBSITE www.csalb.ro provides information about:

• Regulation for organization of the Alternative Banking Dispute Resolution Centre and for functioning of the Steering Board;
• Procedural Rules regarding:
  • ADR procedure concluded with proposal of a solution;
  • ADR procedure concluded with enforcement of a solution;
  • ADR procedure concluded with proposal of a solution for legal entities;
  • ADR Procedure concluded with enforcement of a solution for legal entities;
• Steering Board;
• List of Conciliators;
• Short contact number: 021 9414, available every day between 09:00 AM – 06:00 PM;
• Press releases and media coverage;
• Miscellaneous useful information for consumers and traders.