The current crises have medium and long-term effects. That’s why banks need to offer sustainable and long-term solutions to clients experiencing repayment difficulties. Saving is one of these solutions. Another way out to overcome the deadlock can come from negotiations with the bank via ABDRC, but a cost adjustment by the bank must be accompanied by a rethinking of consumers’ lifestyle.

These are just some of the topics debated on in the Alternative Dispute Resolution Centre (ABDRC) in the 6th episode of #PodcasturileCSALB, featuring Bogdan Pleșuvescu and Camelia Popa, in a discussion moderated by Norel Moise.

| ABDRC PODCAST | https://youtu.be/zM7maG9FKjY

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.

“As market leader in the Romanian banking system, Banca Transilvania treats overlapping crises, inflation and high interest rates with utmost caution, because such crises are not immediately visible, and can have medium and long-term effects. On the other hand, crises bring along also plenty of opportunities. In recent years, lot of money has been pumped into the economy, the infrastructure and energy. This money comes from the National Resilience and Recovery Plan (NRRP) or Government projects, and banks in turn have extended working capital loans to companies, too. This helped both entrepreneurs and retail clients become increasingly more resilient. And above all, wages and the standard of living have increased.

Saving has also grown substantially, as seen in both deposits and investment instruments. We see that investors no longer go for quick results, but invest in the long run. Particularly with young people, we see more and more often a concept of financial independence supported by their passive income. On the other hand, lending has been affected in the first part of the year. High inflation and monetary policy interest rated have increased the cost of financing. The tax on banking assets has added to the cost of loans. Then, with such excess liquidity in the market, banks have adjusted their offerings, and fixed-rate loans unfroze retail lending.”

“What problems have you lately seen between banks and clients, especially retail customers, and what do banks do to help them overcome their repayment difficulties?“

“As interest rates have risen, so have indebtedness and the share of utilities and daily shopping basket spending. People had to spend more to cover for their basic needs, and loan repayment has been somehow pushed into the background. Some clients applied for a resettlement of their instalments, to better suit their current needs. We approved loan restructurings, wrote off amounts, or waived fees. I mean, we didn’t hide behind a computer or struck our head in the sand like an ostrich, waiting for problems to solve themselves. Any problem that arises needs to be dealt with and discussed openly. Thus, resorting to financial education, we tried to explain clients with problems that they would not be able to preserve the same standard of living, and they would have to go out of their comfort zone, and pursue the only avenue available to them, being to renegotiate their instalments with the bank. But this resettlement of instalments is only a short-term solution and needs to be followed by a lifestyle mindset resettlement. This is the only way to make sure that the plan is sustainable in the long run, as they grow older, and experience health problems and additional costs, adding to the ones they know now.

When dealing with the problems experienced by clients, ABDRC’s work has also forced us to educate ourselves in alternative resolution. I’ve stopped looking for justice in every comma and understood that, sometimes, it is fairer to find an economic solution that works for both parties, than to pursue justice just for the sake of it. This approach starts to mainstream in many banks as the ball of amicable settlement benefits has kept rolling and getting bigger. There’s nothing to gain from court proceedings for any party, because costs are involved for both of them. We want to do banking, and customers want to go about their daily lives. And when problems arise, we can address them amicably.”

“Consumers pursuing negotiations with banks via ABDRC want to see their instalments decreasing by any means. We wear the therapist’s hat when we listen to them, and then try to find a solution that would be acceptable for the bank, as well. People’s expectations are high, and the road has been very long. In the early days of ABDRC, people were not aware of either their contract clauses or that their initial repayment schedule changed every 3 or 6 months, depending on how the floating interest was evolving. Now, consumers come with their homework done, and know what to ask for and what’s written in their contract, and this is a huge leap forward. Thus, we agree on solutions that are assumed by consumer, simply because they know their contract and understand what they can or cannot get. Negotiation via ABDRC cannot be replicated in court, but it can provide consumers with genuine benefits. For instance, while a consumer can come up with their own recovery plan, where they reconsider certain expenses and are left with say RON 1,000 or RON 1,500 to pay their instalments, with good the chances that it is accepted by the bank, negotiation still has some limitations. When a consumer goes for too much, this balance can break down. 

There are also instances of consumers approaching ABDRC after having lost a court case. And even in such cases, we did manage to find a solution for the customer. Still, the bulk of cases involve consumers experiencing, or expecting to experience, future problems, such as those who already brough up a court action against their bank, but end up waiving it after having reached a conciliation-based amicable resolution. I urge banks to ensure face-to-face communication with the consumers who approach them, at least during this time. And to be flexible about their clients’ expectations. The solutions they offer should be a genuine helping hand, not a proposal made just for the sake of it.”

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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).