An X-ray of the banking system through the lenses of the big industry events occurred over the last 15 years is the focus of the first episode of#PodcasturileCSALB, featuring Alina Radu (ABDRC Conciliator and Partner lawyer) and Alexandru Păunescu (Legal Director of the National Bank of Romania (NBR) and President of the ABDRC Board), in a talk moderated byCornel Dinu (journalist and founder of Banking News). Who should take responsibility for unrepayable loans? How can the consumer-bank disputes be settled amicably? How did we get from conflict to negotiation between consumers and banks? What are the reasons why the National Bank of Romania could take over protection of the consumers of financial services and products? In 2024, the debates held in ABDRC will look into the financial and banking market news, and their impact on consumers, as well as into how Romanians related to credit institutions, but also to their personal finances in a volatile socio-economic background.

| ABDRC PODCAST |  https://youtu.be/4WeAVbTU23E

This is the 4th season of interviews with senior executives of the banking system management and legal experts. In 2023 and again this year, leading business journalists are invited to debate the hot banking topics in the Alternative Banking Dispute Resolution Centre (ABDRC). In 2024, we review the news and their impact on the financial and banking market, as well as how consumers related to their credit institutions and personal finances, against a volatile and unpredictable socio-economic background.

Alexandru Păunescu (Legal Director of the National Bank of Romania (NBR) and President of the ABDRC Board)

“We are still in the aftermath of the euphoric years 2006-2008. Two are the root causes of the loans granted in times when the economy was rambling, and later ended up causing troubles: a population who as little familiar with the banking products and services (which is not be mistaken for financial illiteracy), and banks’ desire to grow and hold a market share as big as their then appetite for lending. An ID was all that was then needed to take a loan, as no one was looking even into whether the debtor had enough income to repay the loan. And to all these added the lack of forward-thinking as to how CHF would evolve, or how credit cards ended up in mailboxes as people were extended loans at a simple show of an ID. There is no doubt that banks had information available allowing them to show just a bit more diligence.

Then, we had the 2009-2010  financial crisis, which was turned to populistic account as all fingers were pointed to banks for the problems people experienced. In fact, it’s not about finger-pointing here, but about responsibilities shared between consumers and banks. 

In 2015-2016, we had, on the one hand, tens of thousands of court cases between consumers and banks and, on the other hand, the National Bank of Romania setting the ground for ABDRC establishment and advancement of different vision for the then status quo: negotiation and compromise, during a time of peaked conflict, all of which seemed exotic, to say the least. In its first three years of operation, ABDRC strived to win the trust of both consumers, who believed themselves to be harmed by banks, and banks, which were rather sceptical as to the chances of success of a new form of mediation.

While negotiations were conducted on a case-by-case basis in ABDRC, courts were besieged by mass trials. We’ve been saying this forever: each case is unique and must be treated as such; there are no one-size-fits-all administrative measures producing the same results for all. Our loans have different repayment terms, we all live different lives, and earn differently. So, each problem should be discussed and negotiated on a case-by-case basis. ABDRC was proposing this kind of dialogue during at time thick with tension.

In the early days, consumers used to enter reconciliation already with a go-get-them attitude and sought to have the banks punished for what was happening to them. Now, they come to negotiate with their banks how their contract relationships can advance further and better, under terms that best fit their particular situation. The big win is that some of the financial and banking institutions have understood how to react to the claimed needs of their customers. Banks have customized their relationship with consumers and the personal banking approach is increasingly more fashionable.

After eight years (n.n. during which we’ve seen more than 4,200 negotiations between consumers and banks, with the parties coming to terms in 90% of the cases), ABDRC is pivotal in addressing a conflict between the two parties. Also, more than 500 court cases ended up being settled amicably in the Centre.”

Cornel Dinu (journalist and founder of Banking News)

“Two Members of the Parliament tabled a bill in the Senate to allow the National Bank of Romania to take on the consumer protection duties and powers, and thus become the national authority dealing with protection of the consumers of financial and banking products and services. Why is it important for NBR to take on these responsibilities and what justifies such an approach?”

Alexandru Păunescu (Legal Director of the National Bank of Romania (NBR) and President of the ABDRC Board)

“It is primarily a matter of an European approach. Of the 17 EU central banks that have prudential supervision in their Articles, 10 also deal with consumer protection. After 2008-2009, it became crystal clear that the matters related to consumer protection could have a bearing on financial stability. And then this matter enters the scope of the central banks. And whenever it issued a clearance, the European Central Bank has never forget to say that, in terms of consumer protection and securing financial stability, it is beneficial for a central bank to take on prudential supervisory duties and powers, too. It is also worth noting that the National Bank of Romania has never had any consumer protection duties or powers. Voices were heard in the public space saying that we had actually had such duties or powers, but had them transferred to the National Consumer Protection Authority (NCPA) after 2008. The Articles of the Central Bank currently in force date back to 2004 and are silent about this. There have always been consumers approaching NBR to have various problems solved, and the Central Bank has been expected to get involved in consumer protection and was even blamed for not doing so. We have not acted as expected because we had no legal standing to act. The National Bank of Romania is ready to take on duties and powers related to protection of the consumers of financial and banking products should the Parliament so decide and introduce the necessary legislation.”

Cornel Dinu (journalist and founder of Banking News)

“I’d also like to talk about how consumers relate to banks and negotiating with banks, with the aid of ABDRC.”

Alina Radu (ABDRC Conciliator and Partner lawyer)

“The financial knowledge of consumers, and the information they have access to, are still very different. And their personal finance arrangements are still highly diverse. All the more reason for us to adopt a customized approach. However, many still lack a practical understanding of the dialogue with banks. They might have read about banks, and cases solved in ABDRC, or talked to other consumers, but they have not yet actually interacted with a bank.

We’ve seen fewer applications concerning CHF loans. In time, consumers have seen that even court judges handed down different solutions and that were was no black or white outcome.

The same goes also for many people who, were they to take their bank to court, they would not be awarded the claims because their contracts are in line the law. In fact, what these consumers need is support from their banks to adjust their loan agreements, not costly court proceedings that could take years. And, over the years, they got this support in negotiations via ABDRC. Fortunately, in many cases banks were open to finding solutions and willing to find solutions for the problems that occurred with these loans.

The more willing some banks were to negotiate, the more demanding were the consumers with the banks which chose to remain inflexible. Lately, I’ve heard consumers saying: if my creditor does not listen to me, I will simply refinance my loan and go to another bank.”

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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 requests 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).