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.
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