Three times fewer court proceedings involving consumers and banks v 2015-2016
- Nov 25, 2022
- In Press releases
While at the time when ABDRC was established and started to operate (2015-2016) the number of court proceedings between banks and consumers was approximately 40,000, today the number of court disputes has dropped three times, down to little over 13,000 lawsuits. In this context, the Alternative Banking Dispute Resolution Centre (ABDRC) urges again the commercial banks to guide their customers to access the Centre’s services in order to find an amicable solution with the aid of a conciliator, with the view reducing even more the workload of the courts of law. 122 court cases ended in 2022 because the parties turned to conciliation via ABDRC. In 2021, as many as 67 lawsuits were ended this way. In fact, banks recommended customers to turn to ABDRC as soon as they were served the statement of claims. This can render highly effective the negotiations with the banks, and negotiations can start even before the first hearing.
Alexandru Păunescu, representative of the National Bank of Romania in the ABDRC’s Steering Board: “The drop in the number of lawsuits between consumers and banks, from 40 thousand down to approximately 13 thousand, is significant, but the number of the court proceedings could be even lower than it is now. Unfortunately, the proceedings before courts are slow, and many judges are not specialized in financial and banking matters. There are processes lasting years for disputed amounts in the range of a couple of hundreds of Lei. In the end, once the consumers and banks draw a line, they could end up finding that they spent on these proceedings even more than they actually gained. Moreover, only of the parties can be awarded a case. We have called upon the judges to recommend conciliation-based alternative resolution to the parties, as this is a win-win solution. We recommend consumers to go to court only once they have attempted and failed to have their grievances addressed amicably. The court should be last resort because is a time, money and resource intensive method. And if there are still consumers pursuing court proceedings because they have not yet learned of ABDRC, the bank’s duty is to inform them of the negotiation alternative, which is free of charge for them. There are banks which have already been doing this because they understood the benefits of putting an end to expensive lawsuits. This year, 122 lawsuits ended before courts because the parties reached an agreement with the aid of ABDRC. We see that the number of these cases has almost doubled compared to 2021, and this is a sign that there is potential for more banks to adopt this strategy and thus help the number of court proceedings to reduce even more.”
Lawsuits replaced by amicable settlements
122 court cases ended in 2022 because the parties turned to conciliation via ABDRC. In 2021, as many as 67 lawsuits were ended this way. Most of them are being heard on substance, but a court case can be diverted to ABDRC in any stage of the proceedings, with the agreement of the parties. In fact, banks recommended customers to turn to ABDRC as soon as they were served the statement of claims. This can render highly effective the negotiations with the banks, and negotiations can start even before the first hearing. The average negotiation resolution time via ABDRC is 33 days (in 2021).
Examples of pending court cases that found resolution via ABDRC (as retrieved from the portal of courts):
- Action for declaration of abusive clauses;
- Action under Law no. 77/2016 (datio in solutum);
- Insolvency proceedings;
- Challenged against enforcement;
The subject-matter of the claim was:
- Repayment of the management fee that had been charged on the loan principal, and repayment of the financing fee;
- Removal and repayment of the loan management fee and the case review fee;
- Renegotiation of the agreement and instalment reduction (loan in CHF).
Luca Romulus, lawyer of Cluj: “Last month alone, I had 15 clients claiming abusive clauses or instalment increases in court. And we speak here about old loans, taken back in 2006-2008. For those settled amicably, I was called by the bank. I really want to congratulate the bank’s legal advisors who proposed the amicable settlement of the dispute and avoidance of important costs. Once the bank proposes or accepts amicable settlement, I start talking with the ABDRC negotiator, who is in touch with the bank, and then we discuss about the bank’s offer. Myself and the client could add some more arguments and claims until we reach a common denominator. Clients are first happy to see it gets done very quickly. Where the bank proposed the amicable settlement, 100% of the clients accepted the solution reached. In the majority of cases, the bank accepted to pay also the attorney’s feed, but I reduced the fee, so much the more that the resolution time is so short. Unfortunately, not all the banks are the same: I currently provide advice to a consumer who fights a legal battle with the bank over Lei 1,500, and the bank does not seem to take even one step towards conciliation.”
Ionela Aiftincă, lawyer of Botoșani: “In 2022, I had five cases where the parties dropped the lawsuit. They all got resolved via ABDRC, and the resolution time was approximately one week for each. At this time, clients have already been wire-transferred the money. To my estimation, they received around 10-20% less than what they claimed. Still, the conciliation-based solution is beneficial also because it leaves little room for the uncertainty inherent to court proceedings, plus the very short resolution time. The banks that have not yet adopted this solution end up paying significantly higher amounts on lawyers, expert reports, enforcement proceedings, provisions, etc. Unfortunately, this alternative is not well known, and that’s why judges don’t talk about it. My clients were very happy. I even have one client that got to resolved two court cases by conciliation, and he’s now eager to have a third one resolved in the same way.”
Nela Petrișor, former judge with the High Court of Cassation and Justice, lawyer and ABDRC conciliator: “People need to know that the court would never render a fair solution, but they would rule based on the casefile evidence and the judicial truth. The judge cannot turn into a conciliator, or be emphatic, as it happens in the ABDRC procedure. We wonder why people would waste years in lawsuits for minor damages? Because banks are also made of people, clerks. In the department providing advice for disputes, the employees would most often have a gladiator mindset, and would only look at things in either black or white. Therefore, it would be good that banks have legal advisors that have not practiced in courts, and have not gotten the “virus” of the court battles. Most of the times, it is not the bank that refuses conciliation, but the team handling the disputes. In our work as conciliator, we have noticed that when a bank had a key person replaced by a younger, more open person, the entire alternative settlement activity has improved. Courts could do more if the parties were informed by the judge about ABDRC. Just like, in a divorce, the judge it bound to give the parties reconciliation advice in every hearing, they could advise them to reconcile via ABDRC. But conciliation provides an additional benefit over divorce: the conciliator comes with their own expertise and proposes a solution to resolve the problem.”
Close to 4,000 disputes amicably “ended” since March 2016
Before 15 November 2022, consumers and banks had their grievances resolved via ABDRC in as many as 3,960 cases:
- In 2,486 of these, the parties entered negotiations and accepted the solution proposed by the Centre’s conciliators. Other 533 negotiations concluded without both parties having accepted the solution.
- In other 1,474 instances, either the banks or the NBFIs addressed the grievances of their customers directly, with no conciliation intervention, but after the consumers had first approved ABDRC.
- The benefits obtained in close to seven years of work are in excess of EUR 7.5 million.
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).