Codes of Conduct, transparency and self-regulation: towards one double way of protection of the European consumers, legislation and self-regulation.

The self-regulation could be defined as the set of agreements or rules that is established by those who elaborate it and they take it to the practice and whose pursuit is into the hands of the own ones implied.

The self-regulation is translated into the approval of a series of codes that receive different denominations: of conduct, of good practices,

This normative system has its advantages and its disadvantages. As advantages we can stand out that the self-regulation implies a commitment between the lenders of services when accepting the fulfilment of the code. It can mean greater confidence of the consumer because he has a previous information of how its relation with the lender of services is going to be developed whose activity is governed by a code of conduct. On the other hand, it avoids behaviours of disloyal competence between the own suppliers. And, finally, this system is more agile to be adapted to the changes of the social reality that the extremely heavy and slow legislative machineries of the States, being able to be of special utility with regard to the complex, dynamic and always changing industry of the financial services.

Nevertheless, the self-regulation has many inconvenients for consumers, especially in the financial scope: In first place, its essence is its will, reason why it lacks the binding or coercive force of another type of norm. Generally in its elaboration do not take part the own consumers through their representative organizations. In addition the non-observance of the rules of the codes of conduct ordinarily does not carry in an automatic way a right of reparation or compensation in favour of the consumer. These codes of conduct if they are not published in an Official Journal lack the necessary publicity that prevents in great extent that the consumers could know its content. These disadvantages would be attenuated in great extent if consumers could take part, through their representatives, in the elaboration as much as in the conflicts resolution system derived from the breach of codes, mainly through arbitration bodies.

Most of the Codes have a purely voluntary character, in the sense that they do not foresee any sanction by their breach. It is more doubtful that in this case they could be considered in strict sense as part of the normative structure of the processes. Although, in the measurement in which indeed they are fulfilled, they regulate consensually very important aspects and tend to acquire force to force.

An excessive tendency exists to regulate the activities of the financial operators through self-regulation, ethical codes and codes of good practices, which limit the protection of the consumer due in one hand to its observance controlled generally through administrative bodies without being executives their decisions and in another hand its elaboration is made behind the public opinion and without giving significant intervention to the own consumers, we found an example of it in the mortgage scope in which an agreement of good practices had the intention of reducing the level of protection acquired by the Spanish consumers in relation to the lack of entailment of the precontractual informative brochure.

EUROPEAN LEGISLATION

"Green Paper on the consumer protection in the European Union"

Related to the applicable codes of conduct in all the communitarian scope, it is alluded to a Directive frame that made it possible, allowing like this the companies to adhere to an only code of conduct instead of to fifteen. The differences in the national legislations and the general obligations do not allow, by the moment, the development of authentic codes of communitarian application.

Also it says that it is possible that the introduction of a legal consequence for the commitments contracted though codes of conduct or other voluntary commitments helped the companies and the consumers, since these would trust on the public execution bodies acted as "the last instance of application". The most rigorous respect to the commitments contracted through the self-regulation would be an argument in favour of a less important regulation. A selfregulation more rigorous also would solve the problem of the "opportunists", since it would contribute another point of reference to the courts and the authorities in its treatment to the retailers who do not follow these agreements.

The scope of application of the general obligation would not be limited to the companies that are in contact with consumers, but that would also reach to the commercial associations and other organizations which formulate recommendations on commercial practices and elaborate codes, etc.

The combination of a Directive frame and a basis of self-regulation in the European Union could be considered as a coregulating plan.

Proposal of DIRECTIVE of the EUROPEAN PARLIAMENT and the COUNCIL on disloyal commercial practices of the companies in their relations with consumers in the inner market, by which Directives 84/450/EC, 97/7/EC and 98/27/EC have been modified (Directive on disloyal commercial practices):

The elaboration of codes of conduct in the European Union in the frame of the consumer protection must be governed by the following criteria:

- The essence of the codes of conduct is in its will: the companies should not be forced to write up them or to adhere to them; neither to force them to negotiate codes with the public authorities or others third parts. The codes will not applied to which that have not signed them.

- If the States members in whom a tradition of codes of conduct does not exist have to accept their use, with the consequent displacement towards a less intrusive legislation, it is essential that is guaranteed the respect of the commitments assumed in them. The breach of a voluntary commitment will have to be considered as a deceptive behaviour and, therefore, as a disloyal commercial practice.

- There will be included only the commitments those affect to the commercial practices between companies and consumers. Also, the breach of a firm commitment that a company has adopted as the one to follow “certain good practices" only will be able to be considered practical deceptive. The breach of an intentional commitment ("to make the biggest efforts") will not be considered fraudulent.

- The proprietors of codes should be in charge of guaranteeing the conformity of their codes with the present legislation, but they will not be legally responsible of the respect of them by their members. This responsibility of the co-owners in relation to their codes will have to reinforce its credibility.

- The development of codes of conduct in the European Union must be fomented. The adhesion to a code could suppose a "presumption of conformity" implicit, equivalent to the paper that carries out the norms in the "new approach". Given the differences in the national legislations, at the moment it is almost impossible to elaborate an authentic code of conduct in the European Union. Even, the type of commitments assumed in the codes defers enormously from a State member to another one.

- The approval of codes of conduct by the public powers must have a counterpart, in terms of the changes that can request the authorities. The Commission will continue the consultations to determine if it is necessary to anticipate an approval of the codes and the mechanisms necessary to guarantee that the codes are conformed to the communitarian right. The approval of the public powers would produce a presumption in accordance with the dispositions of the frame Directive, but it would not prejudge its compatibility with the dispositions of the communitarian or national right in issue of competence.

A self-regulation example could be found in the sector of electronic means of payment, source of innumerable and bad solved conflicts between the consumers and the financial organizations derived from the non-existence of a binding norm in this matter. The main regulating communitarian norm of this matter is reduced to the Recommendation 97/489/EC of the Commission, of 30th July 1997, on transactions conducted through electronic instruments of payment, concretely, the relations between emitters and holders of such instruments and the European Code of good behaviour in the matter of electronic payment. In spite of the praiseworthy intentions of the Commission we were whereupon actually the cases in which the financial organizations by their own limit the responsibility of the consumer to 150 Euro in the case of loss or robbery of the payment instrument until the moment of the notification of the incidence to the emitter are rare. Generally only the consumer who is knowledgeable of the limit and protests, he is beneficiated by the stipulated thing in the recommendation, and not in all the situations. It is more; some organizations in contracts elevate the responsibility of consumer forcing him to sign higher limits. It is not possible to say that the self-regulation has helped to reach the highest levels of consumer protection in this field.

Spanish legislation

In the strategic plan of consumer protection for period 2002-2005 an objective in relation to the self-regulation is contained, which could be described as praiseworthy but insufficient and with little or null level of fulfilment, in concrete is alluded to:

"Promotion of codes of conduct elaborated jointly between sectors and Consumer Associations which include the creation of a pursuit committee in which participate representatives of consumers and users; as well as the imposition of penalties in case of breach (expulsion of the associations of the sector, publicity of the penalty, economic, etc.); and the possibility of communication to the competent Administrations for inception and execution, in its case, of the corresponding sanctioning file."

A specific case of great importance due to thousand of consumers affected has been in Spain the case of the massive closing of the languages academies in all the national territory. After the beginning of the scandal and in its total apogee the Spanish Confederation of Centres of Formation and Private Academies presented a Code of Conduct in the sector of the private academies. This code that was born from a scandal to correct the situations that gave rise to the same one trying to prevent a new repetition with the same ones, establishes a parietal committee formed by suppliers and consumer associations which will watch its application, being enough with half of the votes of the commission to propose penalties. The beneficial thing of the consumer participation in this code through their representatives is that in case of conflict it is going to have a suitable channel to solve it, outside the non ending and innumerable judicial procedures that has produced the indicated scandal.

Another financial sector in which the self-regulation has had great protagonism is the one of investments in value markets. The lack of transparency of the societies that quote in stock market has generated a distrust climate in minority shareholders that has moved away them of this way of save-investment. And it is that all the normative changes it seems that they move to scandal blow. The case "Terra" has been the one that more incidence has had on the consumers, this branch of Internet of Telefónica, company of telecommunications in Spain, was introduced in the market through a public supply of sale of actions in the best moment for the technological ones to which went thousands of Spanish families. Some years after the outbreak of the technological bubble hundreds of families have been catched with a quotation of their values very small, losing great part of their savings, being harassed by the referred company through OPAS that intimidate them and condition them to sell their values without being able to recover what they invested. In order to give more information to the minority shareholder and to attract the small economizers to the Stock Market in 2003 was approved a law on the transparency of the quoted joint-stock companies. In relation to the self-regulation in this sector the code of conduct for the members of the National Commission of the Values Market can be mentioned, which tries to guarantee the independence and responsibility of the personnel to the service of the supervisor body.

CONCLUSIONS AND PROPOSALS

As has been demonstrated with the inexhaustible accumulation of financial scandals that have not been able to be avoided, the existence of "flexible" norms at communitarian level in the regulation of the financial services absolutely is not adapted to guarantee the protection of the rights and interests of the European consumers.

The self-regulation could be more efficient than a closed norm of forced fulfillment in terms of agility, that is to say, for the quick adaptation to the changing financial reality, but it has nowadays two serious disadvantages that make it unsuitable to these aims: in its elaboration an effective intervention to the consumers through its representatives is not given, neither in the monitoring of its observance and effective mechanisms that correct the breaches are not settled down. All it is derived from the basic characteristics of the self-regulation that are the willfulness and its fragile guarantee.

Another great disadvantage of the codes of conduct is the ignorance on the side of consumers of their existence, and what is more serious, it derives from the lack of exigency and exercise of the guarantees that have the charge their rights contained in the self-regulation. We do not have to forget that one of the main rights of all the consumers and users is the one of the information and the education. The approval of codes of conduct without the corresponding guarantees of its publication Official Journals for its knowledge by the consumers is the root of the non-protection of consumers. The participation of the consumer associations in its elaboration would avoid in large extent the misinformation of consumers by the prevention and information work that make this type of organizations daily.

The relations between consumers and lenders of financial services are characterized by their singularity in relation to other sectors or scopes. In the resolution of conflicts a differential treatment has occurred satisfying the inclinations of the financial organizations of excluding themselves from the arbitration system of consumer. In Spain, the existence of specific organisms of claim for this type of claims was regulated whose basic characteristic is that the solutions given to the conflicts do not solve the dispute, due to they are only mere opinions that the financial organizations are not forced to fulfill even being favourable to the consumers. As it is seen, a special, differentiated and privileged treatment exists towards the financial organizations in the conflicts that arise with consumers, which does not have any justification and allows to grant to these organizations advantages which make them beneficiaries, which means that when exists someone beneficiary always exists other harmed, in this case obviously are harmed the consumers.

This traditional tendency of the communitarian institutions to decide for the self-regulation without counting with consumers in the scope of financial services seems to be broken with the present proposals of modification of the Directives on credits to consumer. At least, before a definitive approval of the new communitarian norm the representatives of the consumers have been heard and it only lacks that in addition to hear them they listen them incorporating their proposals that are born from the bitter experience of thousand of consumers affected by deficiencies and lacks of protection in the present effective norms.

We cannot be conformed to the present situation of "better self-regulation than nothing". Remembering the inefficiency and non protection of consumers which exist at the moment, it would must be continued by the way undertaken by the European Commission in the elaboration of the new regulation of the credits to consumer, making participates the consumer organizations in the elaboration of the European norm in financial services through a previous proceeding of allegations.

On the other hand, it will have to give to a new impulse through the approval of a binding norm through directives and regulations that in any case must be a minimum harmonization, to create definitively in a determined form a harmonized European frame. It must be considered surpassed the phase of "flexible" norms through ethical recommendations, ethical codes or agreements of good practices, that have not supposed other thing than obstacles in the protection of consumers, to whom have been given enough time with the turn out of not having advanced but having backed down.

In any case, if self-regulation has to exist it could be considered only of utility as mechanism of effective protection of consumers in case that it assure the presence of the own consumers in its elaboration and pursuit, stimulating in an effective way the resolution of the conflicts that are derived through mechanisms of fast, safe and economic solutions, mainly through the intervention of the arbitration courts with the participation of consumers. The commitments acquired through a code of conduct will have to have binding character; it could be interesting to this purpose to declare the breach of the commitment as disloyal commercial practice. The most convenient would be the elaboration of codes of conduct on communitarian level introducing binding directions to this levels through the adoption of frame Directives, all it, we insisted, in defect of the binding European norm we requested that it is adopted without more delay.