What can banks, consumers and judges do to overcome the current financial difficulties through negotiations?

In an unpredictable period from an economic and social point of view, the solutions for solving financial problems cannot be general, but are available to banks and consumers, through negotiation, say several specialists, through the Alternative Banking Dispute Resolution Centre (ABDRC). Judges could also play an important role in resolving disputes amicably between consumers and banks, by recommending alternative settlement methods, says Valeriu Stoica, former minister of justice. The banks appetite to solve consumer problems increases. By mid-June, the number of negotiations between consumers and banks is 40% higher than in the same period last year. More than 300 applications were accepted by banks for negotiation, compared to 213 in the same period in 2021. In 225 cases this year, the negotiations ended with the reconciliation of the parties, compared to 187 in 2021, a 20% increase in cases successfully completed.

 

The banks appetite to solve consumer problems increases

By mid-June, the number of negotiations between consumers and banks is 40% higher than in the same period last year. More than 300 applications were accepted by banks for negotiation, compared to 213 in the same period in 2021. In 225 cases this year, the negotiations ended with the reconciliation of the parties, compared to 187 in 2021, a 20% increase in cases successfully completed.

 

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ABDRC Podcasts are a financial education project available on the ABDRC YouTube channel and in the financial education section on the website www.csalb.ro. ABDRC interviewed consumers, conciliators, representatives of commercial banks, the Central Bank and the Romanian Association of Banks in order to offer practical solutions to consumers who face financial difficulties during this period. The messages of the awareness campaign revolve basically around the key benefits of conciliation when addressing problems stemming from contracts, that is: the process is fast, free of charge and efficient.

 

“Banks must abandon standardized, soulless regulations”

Alexandru Păunescu, representative of the National Bank of Romania in the ABDRC’s Steering Board: The role of ABDRC is likely to increase in the following period, given the difficulties that consumers will face in paying their loan instalments. If in 2020 the pandemic led to rising unemployment and many people did not have the money to pay their instalments, in 2022, even if people saved money, their savings are no longer enough. We, at the National Bank of Romania, have always said that it is necessary for banks to lean on each case, on a case-by-case basis, and to limit as much as possible the “bulk”, standardized options, in a soulless regulation. On the other hand, more empathy and customer care are needed. For example, every bank, every NBFI has a telephone number on their website for consumer relations. Very often, in order to get in touch with an operator from that bank, one has to be very patient. When addressing ABDRC, many consumers also need to vent these grievances, to say what their problem is, what happened to them, and the Center offers them a human interface. For this reason, this alternative way of resolving a dispute between a consumer and a banking financial institution creates bridges, creates trust.

 

 

“People should not be pessimistic, but cautious”

Florin Dănescu, Executive President of the Romanian Association of Banks: We, the banks, come from a period in the Romanian society where the legislative approach was extremely dense and not infrequently adverse to the market economy. That forced the banks to have a conservative approach, to instinctively act to protect themselves. This difficult period can be addressed primarily through rigorous consumer information. The information is available, we must all procure it and understand it. Given the inflation, the war at our borders, people need to be cautious, not pessimistic. They should consider that their income may decrease, prices may rise sharply, and instalments further diminish future income. In this difficult context, banks need to provide security not only to those who take out loans, but also to those who have deposits and make savings. 90% of banks’ resources are attracted from depositors. In Romania we have 10 million depositors to whom we offer security, and there were no insecurities regarding bank deposits, nor will there be any. On the other hand, we have 1.2 million debtors who also demand security in a totally unpredictable future.

 

“Judges should ask the parties whether they first approached the ABDRC”

Valeriu Stoica, honorary conciliator of ABDRC: Perhaps the first thing a judge needs to do in a case between a consumer and a bank is to ask the parties whether they have sought an amicable settlement through the ABDRC. It would be sufficient for judges to apply a general principle: to first find the possibility of a negotiated solution, which is also to the advantage of the judge because the trial is shortened and avoids the administration of evidence, hearing witnesses, analysis of evidence, evaluation of evidence. And in the end, the parties may be upset that the judge did not understand the facts well, did not apply the law well. By conciliation, people save resources: psychological resources, because as the conflict escalates and tensions become higher, psychological wear increases. Then, there are savings of financial resources and, not lastly, there is a cost saving which ultimately means money savings.

 

Mircea Stroe, ABDRC conciliator: Many of the cases that go to court in consumer-bank disputes should not be there because many consumers do not have a legal issue with the banks, but a financial one. And such financial problems can only be solved through ABDRC. Issues arising from: a fee, the loan currency, the exchange rate, raising instalments are not legal issues. They only make it more difficult for the judiciary as a whole.

 

Septimiu Stoica, ABDRC Conciliator: There are good preconditions for greater support from banks to consumers during this period. The banks overcame the legal tension, the fairness of the contracts, where they said that everything they did was legal. They understood that the stakes were different: a good relationship with their customers, an optimization of these contracts. The conciliation, ABDRC, tries to introduce a new paradigm in the Romanian society, with a view to overcoming a situation where everybody fights everybody else. Having misunderstandings is absolutely human, naturally, the problem is not to turn them into wars. And reconciliation, through these means of negotiation, is an effort in which we must consciously engage.

 

Radu Rizoiu, honorary conciliator of ABDRC: Many banks have begun copying the ABDRC mechanism internally. This shows that they understand that if they are open to consumers and communicate with those who have grievances or problems, both sides have something to gain. They don’t lose anything, it won’t kill them if they sit and talk to the man to see what it’s all about. We also had cases of conciliation where the consumer approached ABDRC because he wanted to know some information. The bank provided that information which it had not initially provided when the consumer made the request directly to the bank, because it did not understand why it had to provide such information.

 

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 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).

 

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