The health crisis affects consumers, businesses and the entire business environment, but it also has good parts, say the representatives of the largest financial institutions in the banking system. In 2020 and 2021, more than 708,000 consumers have asked banks to postpone the payment of instalments, in addition to those who have requested this from NBFIs. However, the pandemic has facilitated a better relationship between consumers and banks, and negotiation within the Alternative Banking Dispute Resolution Centre (ABDRC) is a tool that credit institutions intend to use more in the coming period. Reviewing each case individually and finding customized solutions is more desirable than moratoria, which offer general solutions, say bank representatives. ABDRC asked the top management of the largest commercial banks in Romania about how the pandemic has changed the consumer-bank relationship. You can find the answers in this press release.

COLLECTIVE SOLUTIONS ARE MATTERS OF THE PAST, INDIVIDUAL NEGOTIATIONS ARE HERE TO STAY

Alexandru Păunescu, President of ABDRC Steering Board

We no longer have banks who refuse to get involved in alternative dispute resolution. Instead, we have banks who get involved to a greater extent and banks who do so to a lesser extent. Fortunately, we are already talking about thousands of negotiations within the ABDRC, of which nearly 2,000 were resolved by reconciliation of the parties, who accepted the solution proposed by conciliators. This is a mentality-changing process: there are fewer and fewer institutions who close many claims, and the largest banks in the system show an openness to negotiation, including in the direct relationship with their own customers. Beyond the numbers, people want to interact with a person who listens to them. The ‘social’ role of the Centre, undertaken by our colleagues from the Procedural Secretariat (n.n. the ABDRC department that receives claims and mediates the contact between consumers, businesses and conciliators), played a bigger part in this area. Consumers received useful information regarding the conciliation procedure starting from the stage prior to the settlement itself, including in relation to certain contractual details that were not understood from the beginning. There were cases in which consumers were happy that direct access to a decision maker from the banks was facilitated, even when the case did not subsequently result in reconciliation. The pandemic has greatly humanized consumer-bank relationships: greater value is placed on empathy, on involvement, on being helpful. It is almost impossible that a contractual relationship is free from unforeseen events. And the most helpful example is the pandemic, which disrupted social relations, contractual relations, turned businesses upside down and changed the importance of certain industries. Therefore, banks that are close to consumers in difficulty during the contract will reap the benefits of their trust in the coming years.

WHAT ARE WE LEFT WITH FROM THE CRISIS CAUSED BY THE PANDEMIC?

ABDRC asked the top management of the largest commercial banks in Romania about how the pandemic has changed the consumer-bank relationship. The interviews were conducted by Irina Chițu, a financial analyst, at the beginning of April.

A video edit is available here: https://www.youtube.com/watch?v=bwreiToGIUk;

Florin Dănescu, Executive President of the Romanian Association of Banks

We saw how banks started to act in a highly accelerated manner, how their workload suddenly increased to a very high level, in a short period of time. During the pandemic, banks were subject to a demand even 20 times higher than in a regular period. This gain in speed, faster processing, determination of the individual standing of each consumer for each type of problem and the experience of ABDRC should be a lesson learned, to be implemented in future relationships with the bank customers. On the other hand, I know that our clients expect us to be able to simply change the contractual conditions, depending on the market. But, especially in crisis situations, this can result in costs that even banks cannot afford. Therefore, expectations must be balanced.

Dana Dima (Demetrian), Vice President of BCR

The legislative solution of deferring instalments has forced us to make quick decisions to solve the issues that many clients were facing at the same time, but I believe that a strategy applied to individual customer issues is more favourable than a solution for a limited time. We believe in legislative and regulatory solutions, but we also believe in individual solutions that we can apply where clients are faced with payment difficulties during the business partnership. We learnt from the discussions that ABDRC had with our customers and we took a closer look at our internal processes. Then we said: We need to change something here! We need to be more present! For example, in 2020, when we entered the process of deferring the payment of instalments, we called tens of thousands of customers to ask if they would continue to have problems after the payment deferral ends.

Flavia Popa – Secretary General BRD

The pandemic, in addition to the damage done, also caused processes to accelerate. If we had to choose anything from the lesson that we learnt because of the pandemic, it would be that we were much faster and we gained the confidence to work with our customers remotely. On the other hand, the moratoria have only served to standardize the practices that many of us in the banking system had already implemented with our customers. Regarding the negotiation with consumers within ABDRC, if I look at 2020 we had a 45% increase in disputes resolved with the help of conciliators. The bank has every interest in having satisfied customers, but also customers who can fulfil their obligations in full and who, in turn, keep their promises.

Omer Tetik, President of Banca Transilvania

I think the pandemic has actually taught us what difficulties our retail and corporate clients can face. These difficulties can be of a structural or contextual nature. This is why solutions cannot be simple and fixed, but need to be adapted. It depends a lot on where the client’s financial difficulty comes from. If the difficulty is contextual, we may try to find solutions to defer instalments, or waive certain contractual conditions. If the problems are medium or long term, we will try to find solutions covering not only the particular customer that was affected, but the entire segment of customers with similar problems. In this area, ABDRC is just like an encyclopaedia, because it sees many cases and not everyone goes through a crisis with the similar difficulties or problems. If another wave of the pandemic arrives, we need to rethink our entire structure. Because just by deferring instalments we fail to tackle the core issue. The most important thing is that banks continue to provide funding, loans, to make sure that people have jobs and are able to consume or invest.

MORE CLAIMS THAN IN 2020

Nearly 650 Romanians (20% more than in Q1 2020) have approached ABDRC in the first three months of this year, to find amicable solutions in their relations with banks and NBFIs. Of all the applications received, 440 have been filed against banks and 204 against NBFIs.

The total number of casefiles formed in Q1 2021 reached 130, of which 127 involved banks, and only 3 such casefiles concerned NBFIs. As compared to the same period of last year, the number of casefiles formed has decreased by 15%.

Furthermore, 54 applications were settled amicably by traders after the respective cases having been first referred to ABDRC (traders negotiated directly with consumers), broken down as follows: 39 applications settled amicably with banks, and 15 applications settled amicably with NBFIs. The number of amicable settlements increased as compared to the same period last year by approximately 23%.

In the first three months of the year, 94% of the negotiations ended with the reconciliation of the parties and only in 6% of the cases one or both parties refused the solution proposed by the ABDRC conciliators.

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. 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).