Romanian banks are now more willing to accept entering into conciliation procedures with dissatisfied clients, a process that aims to be a fair one, as it has a win-win nature, Alexandru Paunescu, board member at Alternative Dispute Resolution Centre in Banking (CSALB), told Business Review.
Paunescu points out that the procedure is free for the customers, who benefit from the support and consultancy of law and financial experts. For banks, the key-benefit is that they continue to conduct the commercial relations with the costumers involved in the negotiation process, as opposed to the court procedure which ultimately alters the contractual relations between the two parties.
What are the main benefits for a bank client who decides to reach out to CSALB rather than a court or other institutions?
CSALB facilitates the negotiation between consumers and banks/non-banking financial institutions (IFNs) regarding issues that may occur in ongoing contracts. Our team of highly prepared conciliators conduct these negotiations between banking institutions and consumers and propose a solution that can be accepted, rejected or re-debated by both parties. The conciliators also have the arbitration procedure at hand, but this has not been requested so far by consumers.
The conciliation procedure is also beneficial for both parties thanks to the short time it takes to reach a consensus, going up to 90 days, which is incredibly time effective as compared to the classic court terms which can extend to several years.
The procedure is considered to be finalized after the parties have accepted the solution proposed by the conciliator. The deadline within which the parties can accept / reject the solution is 15 days from the day of communication.
The parties may withdraw from the procedure at any time. The procedure is similar to the one that takes place in the courts, but the terms are shorter, maximum 90 days, and can be set by mutual agreement.
Last but not least, the procedure is free for customers, so they will benefit from the full support and consultancy of our 21 legal and financial experts.
Nevertheless, the application procedure is really simple and intuitive for the consumers.
Using online application forms (available on the website www.csalb.ro) anyone can make a request and provide us with the necessary documents (contract, decisions, ID docs etc).
What are the main benefits for a bank trying to reach a mutual agreement with dissatisfied clients through CSALB?
The key benefit for the banks is that they can continue to conduct commercial relations with the customers involved in the negotiation process, as opposed to the court procedure which ultimately alters the contractual relations between the two parties.
We are witnessing an increasingly positive attitude by banking institutions towards the negotiation procedure. As compared to 2016, banks are more open nowadays to enter an alternative procedure. We have an average of 60 percent of applications that have been accepted to be converted into files. As a refusal rate, some banks are at 15-20 percent, others are somewhere above – the target for this year is to lower the system average below 30 percent.
Commercial banks have understood that it is less important to prove to the client that the contract is well-founded, but it is important to lean on the business, risk and marketing side, to see how you can maintain good relations with customer.
Now the question is just about business, to see that it is better to retain the consumer and make their monthly instalments bearable.
From this point of view, it is an increasing opening. If we refer to 2016, the banks have set up complaints structures, with people who are related to CSALB. If last year the target was to increase the number of applications, which we partially achieved and continue to maintain, the target now is to move to the bank side and to convince them of the importance of the negotiation especially from a business perspective.
How many people have addressed CSALB since the beginning of this year in order to reach a mutual agreement with banks or other financial institutions (IFN), compared with the same period of 2018?
In the first six month of the year, 1,053 customers submitted requests to CSALB for settlement of complaints with banks or IFNs, 93 percent more than in the same period of last year. As for the formation of cases, the increase in the first six months is 25 percent compared to the similar period of 2018.
A special category are friendly agreements between consumers and banks following the CSALB’s notification: parties concluded in H1 more than 100 such agreements, an increasing number as compared to the previous year.
How long takes a conciliation procedure through CSALB?
The procedure takes a maximum of 90 days. However, the average time required to resolve a casefile has been reduced to 50 days, going down compared to 65 days in 2017 or 80 days in 2016.
Last year, more than one third of the cases were solved in approximately two weeks.
For the consumer the entire procedure is free. If documents are sent by post or courier, the consumer incurs the transport fees. Also, if consumers hire a lawyer or other representative, their costs are borne by them.
What is the success rate of conciliation procedures through CSALB?
In the first six months of 2019, 287 consumers have reconciled with banks or IFNs, through CSALB – over 52 percent more than in H1 2018. In the same period of last year, only 188 Romanians benefited from favourable solutions following negotiations with financial/banking institutions.
What guarantees the fairness of the conciliation procedure through CSALB?
The conciliation process itself aims to be a fair one, due to its win-win nature. No one has anything to lose in a negotiation. Our team of 21 law and financial experts make sure that the process is as effective as possible for both parties, always enabling the most advantageous decision for both.
The philosophy of conciliation is new in Romania, but it is beginning to gain more and more ground in the collective mind. And this is because of a very interesting thing: if the courts are judged according to the letter of the law, at CSALB the cases are judged in fairness.
Specifically, the conciliators try to bring the parties back into balance. The conciliators are professionals, people with impressive careers, renowned lawyers, university professors, former judges or presidents of financial institutions.
The expertise they bring in the conciliation files should represent, for both consumers and banks, a guarantor and an argument in themselves for the fairness, impartiality and efficiency of the procedure carried out within the Alternative Dispute Resolution Centre in the Banking field.
What are the types of complaints most frequently made by clients addressing CSALB (interest rates, fees, others)?
The biggest dissatisfaction relates to fees for services (38 percent of respondents) and to certain contractual conditions which are considered unfavourable (33 percent), followed by the large number of documents requested (11 percent), the long waiting time for solving a request (10 percent) or the attitude of the banking staff (8 percent).
25 percent of Romanians surveyed by CSALB this year (who have at least one financial/banking product) said, however, that they had encountered problems in their relationship with the financial institution.