REPORT ON ALTERNATIVE DISPUTE RESOLUTION AS AT 30.06.2022
- Jul 31, 2022
- In ABDRC reports
During the first six months of 2022, as many as 504 consumers went through the entire conciliation process (application filing, negotiation, final resolution – a solution accepted by both parties), or reached an amicable settlement directly with banks/NBFIs, having first approached ABDRC. The situation is better than in 2021 (up by 60%) when, during the same period, 314 Romanians were reported in one of these two situations.
Starting with Q1 2020 legal entities can also refer to ABDRC cases related to payment services and electronic money issuing. ABDRC received 6 such applications during the reference period, but the financial institutions these were intended to turned down 5 of them, and only one application became a case and concluded with a resolution.
The number of applications received in the first half of 2022 (1,335 applications) stays relatively flat compared to H1 of 2021 (1,229 application, i.e. an increase of approximately 10% in the current year). This organic evolution is driven also by both the months still affected by the sanitary crisis, and the general rise in prices (particularly after the onset of the war very close to Romania), as well as by the evolution of the ROBOR index, which is used to calculate the monthly payable instalments for the floating-interest loans granted before May 2019. Many consumers experience genuine difficulties in making the due payments and these justified circumstances require identification of solutions to rebalance the contractual obligations (with the applications being submitted directly to creditors, or via ABDRC).
Of the total number of applications received by the end of the first half of 2022, 855 concerned different issues in relations with banks, whereas 480 concerned different issues in relations with NBFIs.
In this background, the first half of 2022 observes the same figures as the similar period of the last year. Thus, at the end of H1 2021, as well as during the reference period of this year/H1 2022, the share of applications intended at NBFIs is/was 36% of the total. Additionally, the share of applications intended at banks stayed flat at 64% of the total (781/1.229 in H1 2021 and 855/1.335 in H1 2022).
In this statistical slot we need to highlight also that, in the first semester of this year, the applications for deregistration from the Credit Register (CR) observed a material development. In mid-2022, we see 592 applications for deregistration from the CR (168 intended at banks + 424 intended at NBFIs), already overtaking the figure of the entire 2021 (584 such applications). It should be recalled that most of the applications concerning issues in relation to the Credit Office, the First House programme or assigned loans are closed because, on a case-by-case basis, these are governed by a special piece of legislation which leaves but limited room for negotiation.
The total number of casefiles formed at the end of the first half of 2022 reached 333, of which 331 involved banks, and only 2 such casefiles concerned NBFIs (compared to the first six months of 2021, when 242 casefiles were formed, which means an increase of approximately 40% in the current year). Of the casefiles formed this year, 261 concluded with a resolution (the parties accepted the solution proposed by the conciliator), and additional 40 casefiles are still being processed. In 24 cases, the parties rejected the solution the conciliator rendered and a report was issued, whereas in 8 cases, one of the parties withdrew.
The share of cases addressed and concluded with a resolution (with the parties coming to terms) remains comparable to the similar period of last year (92%). Correlatively, resolutions (cases where the parties did not reach an agreement) account for only 8%. Still, the number of resolutions reported this year is 261, compared to the similar period of the previous year, when only 211 resolutions were reported (a 25% increase this year).
Furthermore, before the end of H1 2022, 243 applications were settled amicably by traders after the respective cases having been referred to ABDRC (traders negotiated directly with consumers), broken down as follows: 85 applications settled amicably with banks, and 158 applications settled amicably with NBFIs.
In the end of the first half of this year, we counted approximately 1,400 requests made by phone, and 144 persons/consumers access the chat function on the website of ABDRC.
The break-down of applications on banks/NBFIs is as follows:
Banks:
- 855 compliant applications;
- 32 non-compliant applications;
- 690 requests for miscellaneous information.
Classification of the 855 compliant applications:
- 331 casefiles formed in the end of H1 2022 (10 casefiles are formed in 2022 from applications received in late 2021);
- 86 applications in the screening phase – documents are being reviewed;
- 85 applications were settled amicably by the parties, but this after the consumer having first referred the case to ABDRC;
- 363 cases were closed.
Classification of the 331 casefiles in the procedure with proposed solution/conciliation:
- 260 resolutions rendered – the parties reached an agreement;
- 39 cases in the processing phase;
- 24 reports – the parties failed to reach an agreement;
- 8 casefile in which one of the parties withdrew.
Means of submitting compliant applications:
- 488 were submitted via the app (website);
- 309 were emailed;
- 25 were mailed;
- 33 were brought to, and registered by consumers with the office of ABDRC.
NBFIs:
- 480 compliant applications.
Classification of the 480 compliant applications:
- 2 cases formed in the end of H1 2022;
- 54 applications in the screening phase – documents are being reviewed;
- 158 applications were settled amicably between the NBFI and the consumers concerned, however after the having first consumer approached ABDRC;
- 266 were closed – rejected by the NBFIs.
Qualification of the 2 cases in the procedure with proposed solution/conciliation:
- 1 resolution rendered – the parties reached an agreement;
- 1 case in the phase of discussions with the parties.
Means of submitting compliant applications:
- 412 were submitted via the app (website);
- 55 were filed by email;
- 3 were mailed;
- 10 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:
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- Credit Office (deregistration from CO);
- Refunds (of fees/commissions, interest);
- Shift from ROBOR to IRCC;
- 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;
- Removal of certain clauses.
- Operational problems:
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- 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:
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- Problems in connection with forced execution (suspensions/stays of proceedings);
- Requests to be issued documents (repayment schedules, statement of account, etc.);
- Refunds of garnished amounts;
- Mortgage deregistration;
- Banking fraud.
The main reason for closing an application is the refusal of traders to have the dispute settle via ADR procedure, and the reasons for closing fall into several categories:
- Good reasons (main) – 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;
- the consumer does not reply within 90 days;
- there is no insurance;
- the consumer withdraws.
- 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;
- lack of grounds (claimed by the trader).
NOTE:
The statistical data shows that the number of consumers who approached ABDRC in H1 2022 observed a slight increase (approximately 10%) compared to H1 2021. If we are to relate to the cases solved (with resolutions or with amicable settlement further to a referral to ABDRC), the results at the end of S1 of this year are 60% better than in the same period of last year, with increase in both the number of cases formed, and the number of direct amicable settlements between the parties (having first approached ABDRC). This increase is driven including by the number of cases effectively solved and concluded with a resolution/the parties reaching an agreement (as an effect of the increased willingness of the parties to negotiate).
First half of 2021 in figures:
· 1,229 compliant applications – 205 applications per month; · 314 applications admitted by banks/NBFIs:
o 211 cases concluded with resolutions/the parties reaching an agreement (an average of 35 resolutions/month), of 242 cases formed at the end of H1 2022 (an average of 40 cases/month);
o 103 applications settled amicably by the parties after an initial referral to ABDRC – (an average of 17 amicably settled applications/month).
2021 in figures (entire year): · 2,525 applications – 210 applications per month; · 555 cases – 46 cases per month; · 280 applications settled amicably – 23 amicably settled applications/month. |
First half of 2022 in figures:
· 1,335 compliant applications – 222 applications per month; · 504 applications admitted by banks/NBFIs:
o 261 cases concluded with resolutions/the parties reaching an agreement (an average of 43 resolutions/month), of 333 cases formed at the end of H1 2022 (an average of 55 cases/month);
o 243 applications settled amicably by the parties after an initial referral to ABDRC – (an average of 40 amicably settled applications/month).
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CONCLUSIONS:
The ABDRC services continue to be accessed by the Romanians who have problems with banks/NBFIs. The benefits of conciliation: the court proceedings avoided and the continued contractual relations between parties, the short case settlement time (time average of 33 days/case in 2021), the procedure is free of charge for consumers, and the expertise of conciliators are important benefits for both consumers and the financial and banking institutions involved in these negotiations, particularly during economically difficult times (the effects of the pandemic and of the war continue to be felt). In this context, the conclusions drawn for the first six months of 2022 are as follows:
- As many was 1,335 Romanian have approached the Alternative Banking Dispute Settlement Centre (ABDRC) in the first six months of this year to find amicable solutions in their relations with banks and NBFIs. Compared to the first six months of 2021, consumers filed approximately 10% more applications (1,335 applications in the end of H1 2022 v 1,229 applications in the end of H1 2021).
- The number of files formed in the first six months of this year it is growing noticeably compared to H1 2021: 333 cases/H1 2022 v 242 cases/H1 2021 (increase of about 40%);
- The fact that the traders operating in the financial and banking system continued to welcome the amicable (direct) settlement further to a referral to ABDRC is another way of solving the claims raised by consumers, particularly when these claims concern simple matters and do not necessarily require the intervention/expertise of the ABDRC conciliators: 243 such cases/H1 2022 v 103 such cases at the end of H1 2021 (more than double than in the previous year);
- During the first six months of 2022, representatives of the top management of a number of banks, the conciliators, representatives of RBA and ABDRC, plus the consumers who used the services of the Centre have voiced/reiterated their public support to the conciliation procedure, and urged consumers in difficulty to approach ABDRC when they experience difficulties in paying instalment, or have other problems with the services and products offered by banks/NBFIs.
- In the first half of the year/at the end of H1 2022, the negotiation procedures involving consumers and banks managed by ABDRC resulted into benefits in excess of EUR 1.1 million (approximately 50% of the total amount of the benefits obtained from negotiations in all 2021). Thus, the total amount of the benefits obtained (in all 6 years of operational activity of the Centre) exceeded EUR 7 million.
- The developments of the past years point to a significant decrease in the number of applications rejected by banks of those received by ABDRC (rejected applications/applications that were not turned into cases): from 80% in 2016 down to 45% in 2018, and further down to 17% in 2021. During the first six months of 2022, the share of applications which were unreasonably closed by banks dropped down to approximately 4% of the total applications filed.
- The share of cases concluded with a resolution further to negotiations (in which the parties accepted the solution proposed by the conciliator) is at approximately 92% (for the applications resolve in the first half of 2022). Slowly, but consistently, the amicable dispute resolution has mainstreamed on the Romanian financial and banking market, with increasingly more actors embracing it: by both banks and some NBFIs, as well as by more consumers, as both parties have realized the benefits of amicable resolution.
The WEBSITE www.csalb.ro makes available also for legal entities an online tool, which allows for faster and smoother submission of the conciliation applications. On the first page of the website, consumers are prompted to access this application by filling in an application. The documents entered in the registration form are uploaded into the app, and their processing time is approximately one hour. The application was setup in observance of the principles of the General Data Protection Regulation (GDPR).
The Alternative Banking Dispute Resolution Centre (ABDRC) is an independent non-governmental, apolitical, and 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 2013/11/EU on alternative dispute resolution for consumer disputes and amending Regulation (EC) no. 2006/2004 and Directive 2009/22/EC.
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