ABDRC Recommendations to Banks: Fewer Closed Applications, Flexible Mandates, Genuine Negotiation

During a period marked by the pandemic-triggered economic hardships, the ABDRC representatives recommend to the financial and banking institutions a number of measures required for the best possible outcome of the negotiations between consumers and banks. The key recommendation regards the applications received by ABDRC from consumers, but which are then rejected by banks/NBFIs. Their number should be reduced, say the representatives of ABDRC, in particular during a period when the flexibility of banks/NBFIs and the support afforded to consumers are mandatory for them to preserve their trust in the financial and banking institutions.

Bucharest, 8 July 2020. Increasingly more banks recommend their clients to approach the Alternative Banking Dispute Resolution Centre (ABDRC). In the context where BCR, BRD and Banca Transilvania have urged their clients to turn to ABDRC when they experience difficulties in performance of their context, we hear the same piece of advice also from ING, Raiffeisen and CEC Bank. In this regard, the ABDRC representatives recommend to the financial and banking institutions a number of measures required for the best possible outcome of the negotiations between consumers and banks.

ABDRC recommendations to improve conciliation

  1. The applications referred by ABDRC to banks should be reviewed by the credit institution with the necessary amount of flexibility for a settlement. In this regard, we recommend that, by the end of year, 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% or even 5%.
    For the time being, the average share of applications closed on unreasonable grounds across the entire banking system in 2020 is 29% of the total number of applications received by ABDRC. For NBFIs, more than 70% such applications are unreasonably closed.
    There are also banks which report a better figure than the average, meaning their closure percentage is below 10%.
    An important share of the closed applications have been rejected for valid reasons. For instance, since 2018 and to date, close to 600 applications have concerned the Credit Office (of which, 220 this year alone). We would like to remind you that most of the applications concerning the Credit Office, the First House programmed, assigned loans have been rejected because, on a case-by-case basis, there is an applicable special piece of legislation which gives but limited, if no, actual room for negotiation.
  2. In the negotiation stage, to our minds, a settlement can be envisaged when the banks shows a genuine willingness to negotiated, 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.
  3. We recommend that the people in charge in the Complaints, Customer Services, Risk, and Commercial Departments should engage stronger with the ADR departments. In this regard, we believe that a 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 are claiming.
  4. We suggest that the mandates granted to the bank representatives in negotiations should have flexible boundaries so as to allow the bank, further to negotiations within ABDRC, to put forward an offer that is better than the bank’s current commercial offer.
  5. We recommend banks to settle amicably as much of the applications, which they would have otherwise unreasonably rejected, as possible, in particular when it comes to less complex cases. Therefore, when it comes to choosing between refusing conciliation and negotiating with consumers in the bank’s premises, we recommend you to pursue the second avenue.
  6. It is important that banks accept applications related to payment services also from corporate clients. As of 2020, ABDRC can provide conciliation services also in connection with such cases involved legal entities.

“The difficult times that consumers, banks and the economy overall are going through now can be a good time to restart the contractual or business relations between the parties. We urge the banks to adopt these examples of good practices that we have obtained with our common efforts, and put them in place in their daily work with a view to increasing the quality of the services their offer to individuals and corporations. Therefore, we recommend banks to accept for negotiation more applications submitted by consumers, to issue flexible negotiation mandates to their representatives, and to adopt an approach that is based more on equity and humanity, rather than on legal reviews that are more appropriate for court proceedings. In the end of these difficult times, the winners will definitely be those that will have managed to remain trustworthy for consumers, including with their alternative resolution work via ABDRC”, says Alexandru Păunescu, Chairman of ABDRC Steering Board.

Banks recommend consumers to negotiate via ABDRChttps://www.youtube.com/watch?v=ke1aBg6Orbo

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Mirela Iovu, Vice-President of CEC Bank

When we notice a hint of a dispute in the direct relation with consumer, we advise them to approach ABDRC, and have their claims address via ABDRC. We made reference to this means of alternative resolutions in all of our contracts. Then, in our legal department, we set up a group that deals with priority with resolution of disputes via negotiation. A key benefit is the fact that all ABDRC conciliators are recognized legal professionals, university professors, or well-known attorneys-at-law, and the resolution method is expeditious, confidentiality-bound, and strives for a win-win outcome. As a rule, parties find a solution that is mutually convenient, whereas in courts, there is always a winner and a loser. ABDRC has strengthened the relation between consumers and bank, and because of this, we need the Centre.

Ioana Regenbogen, Legal and Institutional Relations Director of ING

It is a procedure that supports 100% remote means, where you register your application for negotiation and submit it directly on the ABDRC website. Equally important is also the fact that the solutions rendered by conciliators are not standard, but customized solutions. This stems from the review of the conciliator who looks into what is fair and right for both parties, and this goes beyond the legal constraints. This gives the procedure a human face. On the other hand, being a straightforward and streamlined procedure, information does not risk getting lost on the route, it can be made available fast to all parties, and this makes it easier and faster to reach a solution that is both balanced, and right for the case at hand.

Bogdan Atanasiu, Customer Experience Manager of Raiffeisen Bank

On one hand, we have what the client wants, and on the other hand, we have what the bank can offer. Building on this, we attempt to have an outcome that is acceptable for both parties, even if we do not succeed every time. Conciliation is a huge gain, and the bank learns of the client’s problem in a very short period of time. Thus, the bank is willing to accept supporting documents and negotiate via ABDRC with any client who goes through financial difficulties, has seen their income collapsing, or experiences special social or medical conditions which require additional costs. In our bank, we have people dealing specifically with the flow of applications incoming from ABDRC, and consumers may benefit of the unbiased conciliation of a completely independent person, as the Centre’s conciliators are, who is able to explain both the offer of the bank, and the claims of clients.

In the first 6 months of the year, ABDRC received as many as 1,040 applications concerning banks, and 290 applications concerning NBFIs..So far, more than 260 applications were accepted for negotiation by banks, and only 11 by NBFIs.

To these add also the 140 applications settled amicably by banks and 24 by NBFIs, with the claims having been first referred to ABDRC (these claims do not advance to the negotiation stage anymore because the parties managed to reached a settlement themselves). The remaining application are in screening phase, or have already been rejected by banks/NBFIs for good or no cause. Over the last four years, the benefits obtained by consumers from negotiations are in excess of EUR 3 million..

Last year, ABDRC reported the highest number of applications and cases (applications accepted for negotiation) in all its four years of operation: 2,117 applications, 664 cases (applications accepted for negotiation), and 244 amicable settlements (direct settlements between the parties, with the claims having been first referred to ABDRC).

This year presents itself as a year of record benefits obtained by consumers: record amount in RON (RON 298,000 written off for a consumer of Bucharest), and record amount in CHF (CHF 52,000 written off from the principal of a consumer of Oradea), plus another case where the bank wrote off CHF 43,000 for a family of Bucharest the very last month.

About ABDRC: ABDRC is an entity set up under an European Directive, and intermediates, free of charge and in not more than three months, negotiations between consumers and banks or NBFIs, for contracts/agreements in progress. Consumers from any county of the country may file applications with the Alternative Banking Dispute Resolution Centre (ABDRC) filling-in an online form directly on the website www.csalb.ro. When the bank accepts to enter the conciliation negotiation procedure, a conciliator is appointed. ABDRC works with 19 conciliators, of the best specialists in law and with relevant experience also in the financial and banking field. Everything is settled amicably, and the understanding between the parties has the power of court judgment. More information about the work of the Centre is available by phone at 021 9414 (charged a normal rate).