Contracts between consumers and banks should be simplified, and this may come with the development of digitalization in the banking industry. The Romanian legal framework obliges parties to conclude voluminous contracts with technical clauses that are difficult to understand. Many consumers read contracts only after they have problems paying their instalments, while others choose the costly option of going to court, even though amicable resolution at the Alternative Banking Dispute Resolution Centre (ABDRC) is free for consumers and takes less than a month on average. Here are some of the topics discussed in the third episode of #PodcasturileCSALB, featuring Alexandru Berea and Nela Petrișor, and moderated by Gabriel Bălașu.

| ABDRC PODCAST | https://youtu.be/2Q5GsdufPec

This is the 4th year of ABDRC interviews with senior executives of the banking system and legal experts. This year, leading business journalists are invited to debate the hot banking topics in the Alternative Banking Dispute Resolution Centre (ABDRC). We review the news and their impact on the financial and banking market, as well as how consumers relate to their credit institutions, against a volatile and unpredictable socio-economic background.

“In some countries, contracts between consumers and banks are drafted very simply and easy to understand because of legislation that says that if an article is required by law, it does not have to be included in the contract. In Romania we are witnessing the opposite trend: everything that the law provides for must be included in contractual clauses, because we start from the hypothesis that the average person is not familiar with the law. Thus, contracts we have with our customers become far too bulky and can further complicate the situation for consumers who are experiencing financial problems. The legislative framework must follow the trends of digitalization and adopt the concept of <<legal design>>, i.e. a simplification of contracts. The customer, once they have the information structured, in a clearer and simpler way, will understand it much better.”

“Customer-bank trials involve a number of costs: financial, time and image costs. I would like to refer to the datio in solutum of real estate and the law on the insolvency of individuals. What do you think of these two legislative acts and why we shouldn’t get there?

“These two tools, both from a legal perspective of property rights and as an image, are two tools that people should only resort to in extreme situations. Datio in solutum means giving up a property right to get rid of the loan you contracted to purchase that property. Basically, you’re giving up your dream home to get rid of the loan. Personal bankruptcy is a brutal solution from an image perspective. You have to go to court and provide arguments and evidence why you have ended up in personal bankruptcy. Too few times the explanation is a simple one, such as: I no longer have any source of income! You have to prove why you have no income, what happened? Why didn’t you save when you had income? How did you care for your family to avoid getting there? And I don’t see why you made that effort and not first try to call the bank into a conciliation procedure here at ABDRC. This procedure is free of charge for consumers and takes very little time.

In terms of conciliation, the gain is more important than who is right. We need to achieve a satisfactory result for both the bank and the client. It’s a win-win situation. The judicial system is win-lose. That is, one side wins, the other loses. We tell consumers who have problems: Come on, let’s find a solution together! To do this we must first avoid extreme positions, then understand what the customer wants so that they can take their contract forward and the bank can get their loan repaid.“

“To those who want to resort to datio in solutum or file for bankruptcy, I remind them that any court procedure is a lengthy one, while people in financial difficulty need an immediate solution. The solution of personal bankruptcy does not bring a quick resolution because of specific judicial mechanisms: the judge’s rulings can be challenged in several ways, and there are delays in drafting the ruling. To make a comparison, in the ABDRC, the decision is reasoned, drafted and communicated in only 25 days on average. In which court in Romania can you have the problem solved so quickly?

I have noticed a constant concern of BCR to settle court disputes here at CSALB. The bank has often advised its customers to ask the court to grant a term for an amicable settlement. And the judge even has an obligation to give the parties the opportunity to settle their dispute amicably. Consumers then come to our Centre with a request and we try to negotiate a solution with the bank.  That is, a solution that adapts that loan agreement to the consumer’s current situation. These are some of the cases we handle.

Other demands come from a new category of consumers. These are the people who have probably learned the lessons of the financial crisis of 2009-2011, but also of the pandemic, and are now coming to grips with situations that have the potential to get worse. In negotiations, they ask, for example, for loan restructuring because they anticipate an increase in costs or a decrease in income and do not want to end up unable to pay their instalments. Those who solve the problem before it becomes a serious one are the ones who don’t end up in court, don’t end up notifying the bank of a personal disaster, but are thoughtful, careful and I think we can talk about a new type of consumer. There are more and more responsible people who care about understanding the lending mechanism with all its consequences.“

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  About ABDRC: ABDRC is an entity set up under a 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. Once the bank accepts to enter the conciliation/negotiation procedure, a conciliator is appointed. ABDRC works with 17 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).