Introduction to the Financial Services Legislation in Greece
(By INKA Greece)

STATE OF EUROPEAN AND NATIONAL LEGISLATION ABOUT FINANCIAL SERVICES, SUMMARY OF THE MAIN INTERNATIONAL AND NATIONAL PROBLEMS IN THE LEGISLATION IN RELATION TO THE CONSUMERS

A. The financial services have a very significant role in the European Union. In fact they are the driving force of the European economy. In the frame of the European Union the role and importance of financial services has been taken seriously under consideration; in its effort of ensuring the smooth functioning of the single market in this field, the EU has adopted a serious number of directives targeted essentially at financial institutions .
Nevertheless, all the authors agree that all these directives oriented at the facilitating of a properly run single market in financial services; only take the consumers’ protection into consideration indirectly. Directives especially adopted for consumers’ protection in the sector of financial services do not exist.
At this point one might detect a serious legal mistake, because the necessity of consumers’ protection emerges in the field of financial services. The relationship between the professional bankers and the single consumer is characterized by a significant imbalance. In comparison with the all- might credit institutes, which are organized, using developed marketing techniques and having the necessary legal knowledge, the consumers seem to be powerless. Due to this imbalance a very serious threat arises for the consumers; they will be incapable of protecting their legal interests and vulnerable to unfair attitudes by the bankers. That is why specific provisions for consumers of financial services would be of great importance.
David Byrne , European Commissioner for health and consumer protection, has already acknowledged these possible threats against the consumers and sets the goal that the consumers should be assured on a number of points, including that:
- Consumers will be properly informed about the relevant terms and conditions.
- Their ability to repay the credit will be assessed.
- Interest rates and charges will be calculated in a standardized and comparable manner.
- They will not be subjected to unfair terms.
- They can repay their credit early without being unfairly penalized.
According to the Greek legal order – even though there are not any ad hoc provisions, as well as in the EU – consumers are not left protectless, even in the field of financial services. The last Greek Act 2251/94 about consumers’ protection, the specific dispositions regarding the establishment and operation of credit institutions and the general dispositions of the civil law, secure the rights and obligations of the parties involved in a banking transaction . The Greek jurisprudence and theory have suitably played the role of defining the interpretation of legal dispositions and judging the void and unfair contract terms. It is due to their effort that there is a minimum legal protection for consumers in the field of financial services.

B. NATIONAL LEGISLATION
i) There are not ad hoc dispositions about the consumers’ protection in banking services, as it has been aforementioned. The Greek legislation has been harmonized with the EU directives in a high degree, so that there is a great similarity between the Greek and European legislation . Although there is a lack of specific provisions about consumers’ protection in the field of financial services, we can detect a minimum standard of protection, which is being extended in two levels.
The first level refers to the serious amount of EU directives, which are oriented at the establishment and function of credit institutions. Despite the fact that this legal procedure is not targeted specifically at consumers’ interests, it is agreed that directives also contribute in an indirect manner to consumers’ protection in so far as they seek to establish legislation fostering a stable, reliable factor and are geared to the application of minimum prudential rules. Those directives require financial institutions to provide their clients the appropriate information in order to strengthen their legal protection in case something goes wrong. It is very important to provide a secure environment for the consumers’ needs and interests.
In general, the aim of these directives is to enhance the stability, the trustworthiness and competition of the financial sector, emphasizing on consumer’s protection; this leads to a wider choice of products and services that are being offered at lower prices . The meaning of these directives is that the development of the financial market will also function in favor of consumers, even in an indirect manner. Moreover, all these provisions do not neglect consumers’ interests; on the opposite, by imposing on the credit institutions obligations of information for example, they also seek to satisfy those interests.
One shall not ignore that the perspective of a single run financial market will stimulate the competition through these rules and thus contribute to an increased choice for Union citizens as consumers. In other words, the enhancing of competition will operate as a protection shield for consumers’ interests.
At this point an indicative reference to those directives must take place:
- 92/30:
- 89/647:
- 89/646:
- 93/6:
ii) The second level of protection refers to the last Greek Act 2251/1994 about the consumers’ protection and the general dispositions of the Greek Civil Code, that establishes a quite satisfactory shelter for consumers against creditors’ behaviors, being described as abusive and unfair.
The Act 2251/1994, which actually is a conversion of the directive 93/13 on unfair terms in consumers’ contracts, has the significant role that contracts fulfilled with consumers - including the sector of financial services – do not contain unfair terms. This act is serving the principle of the consumers’ economic interests protection, against the abuse of power by the suppliers of financial services in opposition to the one – sided standard contracts and the unfair exclusions of essential rights in contracts .
The other important question that rises is if the acquirer of financial products can be described as a ‘consumer’, so to take advantage of this law. There is a positive answer to this question. Moreover, the Greek law adopts a wider interpretation of the meaning ‘consumer’ than the abovementioned directive, regarding as a consumer not only the person who is acting for purposes which are outside his trade, business or profession but also the person who is the final user of the product. Of course some theoretical voices insist that this interpretation is not correct and that a stricter interpretation should be adopted. Another approach on the matter points the meaning of consumer to be assessed ad hoc on the basis of whether the acquirer needs protection or not.
According to indisputable theory all these one – sided contractual terms should be checked and judged in three levels. Only if these terms complete successfully this three – level examination, can they be regarded as legal.
- At first, they must have been incorporated in the contract, which happens only under the precondition that they are drafted in plain and intelligible language, so to give the opportunity to the consumer to examine all these terms.
- Secondly, in dubio the interpretation most favorable to consumer must prevail. This is a specific meaning of the general legal principle ‘in dubio pro stipulatorem’ .
- Thirdly, the term should not be regarded as unfair. The Act contains an indicative catalogue of such abusive and unfair terms, but this catalogue is not restrictive. Despite the fact that a term is included in this catalogue or not, it shall be regarded as unfair, if it causes a significant imbalance in the parties’ rights or obligations arising under the contract, to the detriment of the consumers. At this point it should be noted that the Greek theory does not demand a ‘significant imbalance’; even a ‘material imbalance’ appears to be enough.
Consumers’ protection against abusive attitudes is being concluded by the general dispositions of the Greek Civil Code, in particularly the articles 57, 281 and 288, which forbids every attitude, that confronts with the requirement of good faith. All these articles are considered to be of vast significance and courts have repeatedly acknowledged that consumers are protected by them. Pr Karakostas considers that the consumers’ protection due to these articles (the Act 2251/1994 and the International Treaties of Rome) constitute a general principle of our legal order.
Apart from the abovementioned provisions the Act 2251/1994 provides the consumer with collective judicial protection through the class action 11.The subject matter of such class action is the detection of the suppliers’ offensive behavior against the consumer. Of course, the court, ruling on a class action, judges within the framework of the formative function of the law. This class action is a very effective weapon in the hands of consumers’ organizations in their effort to prevent the continued use of such terms.
Indicatively , Greek courts have already judged some interesting cases about the class action and unfair terms used by the creditors. In this manner courts determine the interpretation of the legal rules and thus realize the consumer protection against attitudes, which constitute an abusive use of power. Such terms, which give the financial supplier the right to alter unilaterally basic terms of the contracts, like the …,or the authorizing of the supplier to dissolve the contract in case there is some delay in the repayment of the credit, have been characterized by the courts as unfair and void.
iii) Another point of the Greek legal order that offers protection to consumers is the obligation of the creditors to provide consumers with the necessary information about the products or the services. This obligation should not be underestimated, as its violation can cause many bad consequences for the creditors, such as compensation for example. The Code of the Banks determines the extension of this obligation.
C. EUROPEAN LEGISLATION
At this point one has to detect a great similarity between the Greek and European legislation, which is normal, as the aforesaid national legislation is actually transformation of the European legislation. So it is a fact that European directives seek to organize the establishment and function of credit institutions; this is also in favor of the consumers, but indirectly. Although there are not specific provisions for the field of financial services, consumer is not helpless, but he can use general directives for his protection. Some typical directives are mentioned in the previous chapter.
D.PROPOSAL
The standard of legal protection for consumers can hardly be characterized as satisfactory. There are some rules, there is class action, and there are some obligations for the creditors. Yet, the field of financial services is regarded as one of the most crucial and challenging in the case of consumers’ protection, due to the imbalance between the two contractual parties being vast.
Apart from this imbalance the sector of the financial services is quickly developing and using new promoting and marketing techniques that touches on unfairness but at the same time seem to be legal. Due to these reasons one can detect a need that EU has to develop a legislation, which contains ad hoc provisions for the consumer protection in the field of financial services.