EXTRACT FROM THE CONCLUSIONS OF SALVATORE ROSSI, General Manager of the Bank of Italy, at the presentation of the REPORT on the activity carried out by the BANKING AND FINANCIAL ARBITRATOR in 2015.
The Banking and Financial Arbitrator was conceived by the Bank of Italy as a way, though not the only one, of improving the climate in bank-customer relations and therefore of protecting the entire system through the customer. A customer who believes he has suffered abuse or unlawful behavior on the part of an official or a bank office can, instead of starting a long, complex and costly legal dispute, contact the Arbitrator, with two important advantages: 1) costs almost void, given the low amount (20 euros) of the entrance fee required and the non-need to be assisted by a lawyer, thanks to the simplicity of the procedure; 2) faster judgment times. The fact that the procedure almost always makes legal assistance superfluous has another positive effect, in addition to the lower cost: it mitigates the frustrating feeling of feeling David against Goliath in the plaintiff, who in a courtroom, where the bank can certainly count on a host of seasoned lawyers, is major.
The main drawback of resorting to a system of this type is that the judgment is not binding on the loser. But it's only an inconvenience on paper. In reality, if it is the bank that loses, according to our findings, it complies with the judgment in 99 per cent of cases, often also by modifying its internal practices or organizational methods to prevent the behavior judged to be incorrect from being repeated with others clients. The loss of reputation that would follow from disobeying the Arbitrator's pronouncement, immediately made public, is judged by the banks to be too high a cost, even when they do not share the judgments issued.
Over the six years of operation of the ABF, customer appeals were rejected, thus proving the bank right, in a percentage that progressively decreased from approximately 40 to 30 per cent. In all other cases, either the appeal was accepted, or the parties agreed before the judgment to bring the dispute to an end. The ABF has had growing success with bank customers and also with the banks themselves, who see a reduction in legal disputes, which are also expensive for them, and can draw inspiration from it to improve their organisation. The appeals went from 3.400 in 2010 to 13.600 last year. Other countries are also starting to show interest in this method of protecting bank customers, which is an all-Italian "good practice".
The success had a negative aspect: the times for decisions have lengthened, especially since 2014, with the soaring number of appeals processed. On average, the number of months required for a judgment has increased from just over three to eight. Even the constituency of Naples, constantly the most productive of the three, which had managed to contain its times in less than three months until 2013, then rose to almost seven in 2015. These are still unthinkable times for civil justice , which takes more than three years on average to resolve cases of this type. But it is a drift that has us very worried. Speed is essential for this body to continue to grow in public knowledge and approval.
We first reacted by increasing the resources available. The members of the colleges, including substitutes, have increased from 42 to 65, the staff of the technical secretariats and of the central office from 35 to 72. But that was not enough. We then decided to enhance the offer of these services, adding to the three existing four colleges, with as many technical secretariats: Turin, Bologna, Bari and Palermo. The resources involved will increase by around 60 members in the colleges and 40 people in the support structures. The measure taken also intends to better distribute the offer on the territory. Our ambition is to obtain two results. By 2018 we would like to achieve: 1) handling up to 20.000 appeals, also thanks to new IT applications; 2) to reduce the average decision time to no more than three months.
We observe that the same jurisprudence on banking matters increasingly takes into account the decisions of the ABF. This is certainly a positive phenomenon, as it strengthens the credibility of the Arbitrator's judgments in the eyes of the users. The risk we run is that of a mutual attraction, ie that the Arbitrator ends up resembling more and more a civil court, both in the competences of the people called to be part of the panels and in the tenor of the decisions. But this would be a mistake. An arbitrator called upon to settle disputes between banks and customers cannot only look after the observance of the rules: that is the basis, which cannot be renounced, but we must add the ability to make the best market practices prevail, which laws and regulations do not necessarily codify . It will be important to maintain a balance of skills and previous experiences in the colleges, which are not limited to legal and jurisdictional ones.
Attachments: Presentation Financial Banking Arbitrator
