Access to Justice in financial services in Germany
(By Verbraucher - Zentrale Hamburg e.V.)

Access to justice in Financial services: judicial and extrajudicial defence.
German Legislation and European Normative

Access to justice for all is a fundamental right contained in Article 19 of the German Constitution and in Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. In Germany there is an ongoing discussion on how to put this right into action. Due to the weaker position of consumers in contrast to the providers of financial services regarding information, know-how and financial means “good” social policy should aim at making access to justice, e.g. access to information, to legal advice, to judicial and to extra- judicial aid available for con-sumers.
German legal politics in the 1970ies was stamped by the effort to a better so called “access to justice” not only for the poor but also for hardly organized groups such as consumers. The focus was very much aimed at access to the traditional judicial sys-tem. Therefore the German legislator set up a “judicare system” in the early 1980ies helping providing everybody with affordable legal advice as well as representation in court.
This first “wave” of society politics in Germany was followed by a second “wave”, publicizing for “alternative” methods of dispute resolution (ADR), i.e. methods of dis-pute resolution without judgment. In this respect one can tell between ADRs in the context of juridical proceedings or out-of-court ADRs.
Since the beginning of the 1990ies the discussion in Germany has developed from “Alternative Dispute Resolution” towards “Appropriate Dispute Resolution”: good so-cial policy should provide their citizens with alternative schemes of dispute resolution for that everybody could choose the dispute resolution scheme that suits him the most. Therefore justice will be no longer a system that only ends disputes, but also a system that manages conflicts.
Legal Aid and Advice: the Judicare System in Germany
The German legal aid scheme was enacted into law in 1980 and draws a distinction between legal advice given by lawyers and the availability of representation in court (legal aid). The German Civil Procedure Act (“Zivilprozessordnung”, ZPO) provides for legal aid in cases, when a party cannot apply the costs of a civil action due to its per-sonal and economical conditions, but only if the intended prosecution or defense of-fers sufficient chance for success and does not appear deliberate (ZPO § 114). The respective party has to use its monthly net income less the costs of accommodation and heating and less a free allowance of € 360,00 according to the German Federal Social Welfare Assistance Act (“Bundessozialhilfegesetz”, BSHG), ZPO § 115, BSHG § 76.
According to the German Federal Act regarding legal Advice (“Beratungshilfegesetz”, BeratHiG) legal advice outside of a judicial procedure shall be granted on request if the above mentioned conditions are given, i.e. if the respective party cannot apply the costs due to its personal and economical conditions and if there are no different reasonable possibilities for an assistance at the disposal and if the perception of the rights do not appear deliberate. The German BeratHiG basically provides for legal advice by lawyers who will obtain reimbursement in return by the respective federal state. In some German federal states, namely Bremen and Hamburg the already ex-isting Public legal Advice Centers (“Öffentliche Rechtsauskunft”, ÖRA) replace the right to legal advice by lawyers as provided by the German BeratHiG. In Hamburg the Public legal Advice Center has got 12 regional offices offering legal advice, arbi-tration and mediation.
The Representation of diffuse Interests: Group Actions in Germany
There has been a long tradition of organisational actions (“Verbandsklagen”) in Ger-many. The German Act regarding the action for an injunction (“Unterlassungsklage-gesetz”, UKlaG) provides for the right of qualified entities, such as consumer advisory agencies to file for injunctive relief. Also the German Law Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb”, UWG) empowers consumer agencies to file claims for injunction. According to the judiciary the associations to whom the group action is granted, e.g. consumer agencies, have to try to achieve a contractual stop-use agreement before filing a claim. The ZEDA database, launched by the Ger-man Consumer Advisory Agencies in order to monitor group actions in the various German federal states contains about 15,000 cases concerning stop use agreements and claims for injunction, thereof 702 affecting the banking sector and 414 affecting the insurance sector. Most of them, i.e. 558 cases affecting the banking sector and 163 cases affecting insurance corporations concern standard business conditions used by the respective institutions. Group actions by qualified entities in Germany are therefore of high importance concerning control of unfair standard terms and condi-tions used by banks and insurance corporations.
“Alternative” Dispute Resolution Schemes concerning financial Services in Germany
In Germany ADR schemes has received close attention by the legislator. According to the German Introductory Law concerning the German Civil Procedure Act (“Ein-führungsgesetz zur ZPO”, EGZPO) the German federal states may require that the respective parties of a claim must try to reach a extra judicial agreement before filing a claim (EGZPO § 15 a). The provision only applies for financial disputes with an amount-in-controversy not exceeding the sum of € 750.00.
Some Federal States, such as Saarland, Brandenburg and Hesse converted the offer, whereas other federal states, such as Bavaria, North Rhine-Westphalia and Baden-Württemberg still test and evaluate the regulations.
Also the European Union made ADR a central topic and suggested adjustments in its green paper on alternative dispute resolution in civil and commercial law (Com(2002) 196 fin.).
In October 16, 2001 the pilot phase of the European Extra-Judicial Network (EEJ net) was launched in Brussels. EEJ-Net is a network of out-of-court redress mechanisms operating in the EU/EEA countries. The aim of the EEJ-Net is to facilitate access to justice for EU/EEA consumers in particular for cross-border e-commerce disputes. EEJ-Net aims to achieve this by linking together the various out-of-court consumer dispute settlement bodies in the EU and EEA member states by a network of contact points- so called Clearing Houses. Germany has got a large variety of arbitration boards. At the moment there are about 400 out-of-court dispute settlement bodies registered in EEJ-net, thereof 203 German out-of-court bodies. In January 1, 2002 the German Federal Ministry of Justice added the German Clearing House as a new service department to the already existing supporting structure of Euro-Info-Consumers in Kehl. In the reporting year 2003 the German Clearing House reported a total of 732 cases, thereof 403 enquiries for information, 236 legal disputes and 93 complaints. The total of only 35 cases affected financial services.

In February 2001 the European Commission launched FIN-net, the European out-of-court network for cross border financial disputes. The scheme links already existing national complaint schemes from 15 EU member states and 2 EFTA countries which adhere to a Memorandum of Understanding and comply with Commission Recom-mendation No. 98/257 on principles applicable to the bodies responsible for out-of-court settlement of consumer disputes.
In spite of the different nature of EEJ-net and Fin-net the Clearing Houses of the EEJ-net could be possible entrance points to FIN-net.
At the moment there are 8 German out-of-court dispute settlement bodies registered in FIN-net , thereof 6 concerning the banking sector and 2 concerning the insurance sector. Each one of the three main German bank groups, i.e. the German private banks, the German cooperative banks and the German regional savings banks has launched their own individual out-of-court dispute settlement schemes.

The federal association of German private commercial banks (“Bundesverband deutscher Banken”, BdB) and the German Mortgage Banks Federation set up the Pri-vate banks´ ombudsman protection scheme in 1992. The scheme is designed pri-marily for consumers and covers all products offered by participating banks. The scheme does not cover intermediaries. The scheme is free of charge to bank cus-tomers. If customers do not accept the Ombudsman’s decision, they are still free to go to a court of law. Customers cannot lose out by forfeiting their claims under the statutory limitation period during the Ombudsman proceedings. The private commer-cial banks have undertaken to accept the ombudsman’s decision in disputes involving amounts up to € 5,000. Experience has shown that banks also usually accept Om-budsman´s decisions against them even where disputes involve amounts exceeding € 5,000.
In the reporting year 2003 the private banks´ ombudsman protection scheme re-ported a total of 3,110 complaints, thereof 1,698 admissible petitions. 781 com-plaints were solved in favour of customer, 858 in favour of bank. Complaints in con-nection with investment business were leading (44.7 %), followed by cases con-cerning payments- and account management (29.4 %) and the lending business (18.5 %). Only 30 cases affected FIN-net, thereof 20 complaints and 13 enquiries for information.

In 2002 the Federal Association of German Credit and Agricultural Credit Coopera-tives (“Bundesverband der Deutschen Volksbanken und Raiffeisenbanken”, BVR) launched the Ombudsman’s scheme of the German cooperative banks. The rules of procedure are similar to the respective rules of the private banks scheme. Just the same as it is with private banks, intermediaries are not covered. In 2003 the scheme reported a total of 1,272 complaints, thereof 318 admissible complaints. Complaints affecting payments- and account management were leading (28.0%), followed by the investment business (27.0%) and the lending business (21.5%).

The regional savings bank and giro associations run their own individual arbitration boards. The respective procedural rules vary depending on the single schemes, but are similar to the rules of the private banks scheme. Up to now there is no annual report on available.

As the banking sector, the insurance industry has launched its own ADR scheme, the insurance ombudsman. The scheme covers insurance contracts and insurance bro-kers or agents of participating companies. The scheme is free of charge for custom-ers. Complaints are admissible up to a limit of € 50,000. Decisions up to an amount of € 5,000 is binding on the involved insurance company. Decisions from € 5,000 up to € 50,000 are recommendations which are not binding on either party.
Main Problems for the consumers and proposels of modification of European normative.
As pointed out above, German policy has already reached a relatively high level of access to justice for everybody in theory. There is a large number of ADR schemes in Germany set up by various private suppliers. One exception are the German securi-ties trading banks and investment companies. Unlike banks and insurance coopera-tion those institutions have not set up an ADR scheme yet.
But in contrast to the variety of schemes there is a lack of information concerning these offers on the consumers´ side, especially as far as cross border financial serv-ices are concerned. Resulting from this lack of information there is a lack of utilisa-tion of ADR schemes. Therefore provisions on access to information for consumers are due, with special regard to information concerning access to justice. One exam-ple for the difficulty of getting information on ADR schemes would be Hamburg’s re-gional savings bank: In October 2004 it is not possible to obtain information about the schemes´ rules of procedure via the internet. Therefore the various ADR schemes should be obliged to make there respective rules of procedure easily avail-able to the public. The same obligation should apply for reporting on the results of ADR complaints.
Facing the large number of different federal states´ schemes it should be taken into consideration to set up local clearing (information) points where information on ADR is collected in Germany, not only in respect of cross-border services. ADR in Germany is characterized by a nontransparent market.
The existing regional consumer agencies already provide information on how to gain access to justice including ADR schemes, but the financial means are often insuffi-cient.
As long as private consumer agencies in Germany have to be largely subsidised by public funds for fulfilling missions of general interest the situation will hardly change.
A new concept of group actions, extended by the possibility of the assignment of a claim could help to improve the situation. Therefore the German doctrine of damages being an individual burden to be compensated should be taken into consideration.
In cases of widely spread minor losses consumer organisations should have the right to file a claim in order to obtain damage relief. Money raised in such way could be used to put up budgets of consumer organisations in order to enable them to provide consumers with information.
As for information, there is still a lack of education related to ADR in Germany. Though the Law to Reform the Lawyers Studies (“Gesetz zur Reform der Juristen-ausbildung”), launched in 2002, provides for rules concerning rhetoric skills, media-tion, arbitration, communication skills and negotiation skills, there is still a consider-able need to put these provisions into practise.