Guarantee funds in Greece
(By Inka Grecia)

Guarantee funds in financial services: the defense of the consumers before the banks, insurances and services of investment insolvency situations.

INTRODUCTION

European Union needs to keep pace with new sources of financial risk and state-of-the-art supervisory practice in order to contain systemic or institutional risk (e.g. capital adequacy, solvency margins for insurance companies) and to take account of changing market realities (where institutions are organised on a pan-European, cross-sectoral basis).
This is the reason to create several plans in order to help and protect people in their relation with the financial sectors.

I. A. FINANCIAL SERVICES ACTION PLAN (FSAP)
("Implementing the framework for financial markets: action plan" [COM(1999) 232 final])
Its objective is to propose policy objectives and specific measures for improving the single market in financial services.
Suggested measures which are included:
? moves to bring banking, insurance and securities prudential legislation up to the highest standards, taking account of the work of existing bodies such as the Basle Committee and FESCO;
? work on prudential supervision of financial conglomerates ; following the third report on progress in the implementation of the Action Plan for the Financial Services set out below, the Commission felt that the drafting of a proposal for a Directive in this field was one of its ten priorities. Financial conglomerates are entities which offer a range of financial services in areas such as banking, insurance and securities. These structures which often operate on a cross-border basis have developed so fast that new rules are required. The traditional approach whereby financial operators were distinguished by sector no longer holds;
? initiatives to improve cross-sectoral discussion and cooperation between authorities on issues of common concern which include the creation of a Securities Advisory Committee.

B. DEPOSIT-GUARANTEE SCHEMES (Directive)

The European Parliament and the Council adopted on May the 16th 1994 the Directive 94/19/EC of on deposit-guarantee schemes [Official Journal L 135 of 31.05.1994].
Its objective is to protect throughout the territory of the European Union the depositors of all credit institutions and to safeguard the stability of the banking system as a whole.
The Directive requires each Member State to ensure that within its territory one or more deposit-guarantee schemes are introduced and officially recognized. (However, if certain conditions are satisfied - including equivalent protection for depositors - a Member State may exempt a credit institution from belonging to a deposit-guarantee scheme where that credit institution belongs to a scheme which ensures the continued operation of its member institutions.
Procedure to be followed where a credit institution does not comply with the obligations incumbent on it as a member of a deposit-guarantee scheme (sanction going as far as withdrawal of the credit institution's authorisation).
Deposit-guarantee schemes introduced and officially recognized in a Member State shall cover the depositors at branches set up by credit institutions in other Member States.

II. A. THE RESPONSIBILITY DUE TO THE PROVISION OF SERVICES AND THE CONSUMERS PROTECTION TO THE GREEK LEGISLATION

1. The protection of article 8 law 2251/94

In Greece the responsibility due to the provision of services is regulated MAINLY in the article 8 law 2251/94 (OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC A-191/1994) on "consumer protection ".

According to article 8§ 1 l.2251/94 the provider of services is accountable for each damage, caused culpably at the benefit of services. From this founding legislative rule of responsibility it results that its terms are the attachés:
a) benefit of services,
b) culpability,
c) damage,
d) causal affinity between benefit of service and damage.

2. Benefit of independent professional services

a. Positive action

According to article 8§2 b’ l.2251/94 as provider of services is considered whoever provides, at an independent way, service within the frame of exercising professional activity. As service with the significance of this provision is not comprehended the benefit which has as direct and exclusive object the manufacture of products or the transfer of real rights or copyrights (article 8§2 a’n.2251/94).

In the services covered from the article 8§2 l.2251/94 are not those which covered within the frame of "public service". On the contrary, article 2§1 of Proposal Directive of 9.11.90 together with article 3§1 of Draft Directive 12.5.92, cover also the benefit of public services. They are excluded from them according to article 2§2 of Proposal Directive the public services relative with the public safety, "because of the particular character that they present".

3.The fault of the provider of services

a. The culpability as essential condition of responsibility

The law does not determine the required degree of fault of whom providing services. Hence he is accountable for his each form of fault: deceit, heavy or light negligence. Specifically as for the negligence it is pointed out that this is not comprehended only as internal behavior, but also as exterior behavior, as infringement of exchange obligations of providence and safety, and in this way is identified with the outlaw.
At this point, it should be stressed out one general and certain special criteria, which the Greek legislator placed for the estimation of lack of culpability. The general criterion is the legitimately expected safety and it has objective character, because is formed as critical size for the ascertainment of responsibility based on the exchange obligations of providence and safety. This vague legal significance should be interpreted in the light of aim of article 8: aim is the re-establishment of damage, caused because of lack of safety, in legal goods of recipients of services. Hence the provider of the service is to blame, if the service does not correspond in the safety which she is eligible legitimately waits for the medium representative of circle of recipients of service, with reception into account of also more special criteria, which is reported in the law.

These specific criteria, which are also answered in article 6§4 of draft. Directive of 12.5.92, not however in article 1§3 of Proposal. Directive 185, are the following:

a) The nature and the object of service, same concerning her degree of danger
b) The exterior form of service. It is the "presentation of certain service on behalf of the institution or on behalf of third persons permitted from the institution or with the approval or its tolerance and more specifically the projection of attributes and advantages or the assurance for the safety of provided service.
c) The time of providing services. The element of time plays important role in the estimate of content of exchange obligations of providence, because the level of knowledge as well as the data of science or technique in the particular field of activity during the time of providing the service is critical.
d) The freedom of action, which is left in the damaged during the time of service.
e) Whether damaging belongs in category being at a disadvantage or assailable persons.

4. The damage

a. Significance
Article 8 l.2251/94. does not determine the significance of damage. On the contrary the article 4 of Proposal Directive appoints that with the term damage is comprehended:
a) The direct damage, caused by the death or by each offence of health or bodily integrity of persons.
b) The direct damage, caused by each offence of natural integrity mobile or motionless goods.
c) Each material pecuniary damage, which constitutes direct emanation reported in the elements a and b of damage.

Article 8 l.2251/94 contrary to the Proposal Directive does not clarify if in the restored damage is included also providing services. Thus despite the restrictions of Proposal Directive197, it should be accepted that article 8 covers each damage, hence not only the one that is caused in personal or financial goods but also purely financial, provided that also the remaining conditions of the composition of responsibility exist (same the outlaw). Damage therefore is approached as in the internal law: any damage, that is to say unfavorable change, that is caused in the tangible or intangible goods of a person.

b. The causal contact

So much from article 8§1 l.2251/94 ("is guilty for the damage caused when providing services"), and from article 8§3 l.2251/94 ("whom damaged should prove the causal affinity between the benefit of service and damage ') results also that in the responsibility of the provider services the causal contact between legal reason of responsibility and damage, constitutes condition for the re-establishment of damage of recipient of services. It is required expedient (theory of expedient cause) causal affinity, that is to say should the cause of damage had generally the tendency, the faculty leads to it, according to the usual course of things and with base the beforehand possibility of forecast of medium experience (no more experienced than the mean) objective third observer.

c. Co-culpability, reduction or lifting of responsibility (aiding fault damaged), exonerative clauses, prescription and depreciable deadline

According to article 8§6 l.2251/94 the provisions on the co-responsibility, the reduction or the lifting of responsibility and the prohibition of exonerative clauses of §§ 10,11 and 12 article 6 are proportionally also applied in the responsibility of the provider of services.
There is forecasted 3 years prescription with inaugural time point, when the damaged was informed or owed to be informed for the damage, the fault and the identity of producer, while afterwards 10 years by the circulation of particular product is befallen damping of rights of the damaged at the producer.

B. SPECIAL REGULATIONS ON THE CONSUMER PROTECTION FROM BANKS IN THE GREEK LAW, THAT CONCERNS SYSTEMS OF GUARANTEE DEPOSITS.

Greece has incorporated in the Greek banking legislation and more specifically in the law 2324/1995, regulations (number 94/19/EU) of Directive of European Parliament and Council of European Union, "about systems of guarantee of deposits", which were published in the Official Newspaper of European Communities (L135/31.5.94, p. 5) :
Fund of Guarantee of Deposits was created (F.G.D), which is a legal person of private right and has insurance character and the aim of which is:

" the payment of compensation to the depositors of credit institutions which are mentioned in the article 42 and are found in weakness in order to fulfil their obligations, and the strengthening of stability of credit system". Specifically, regarding credit institutions that are seated in Greece, the F.G.D covers the deposits of their branches in countries of the European Union, as well as their branches in third countries, provided that these are not provided by equivalent guarantee system in the countries of reception.

Credit institutions that have received the authorisation of foundation and operation in Greece, except for the Postal Savings bank, the Fund of Deposits and Loans and credit institutions under the form of credit cooperatives of law 1667/1986 (OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC 196 A), obligatorily participate to the system of guarantee of deposits F.G.D (article 2 of law 2076/1992, OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC 130 A).

A deposit is not available when it is owed and has not been overwhelmed by a credit institution, according to the legal and conventional terms and one from the following conditions:

a) The Bank of Greece has realised that the credit institution is not capable to return its deposits, for reasons that have direct relation to its financial situation and will not be provided in the near future. The Bank of Greece proceeds in the above-mentioned ascertainment in twenty (21) calendar days at the latest from the moment that it is
Proved for the first time that the credit institution has not returned the due and claimed deposits, or

b) Juridical principle based on reasons that are directly related to the economic situation of the credit institution have published a decision, result of which is the suspension of legal means against the institution, by its depositors, in case that is realised before the ascertainment of Bank of Greece which is mentioned in the previous paragraph.

c) F.G.D as soon as it receives the aforementioned order of the Bank of Greece or of the designated judicial authority or of the designated regulatory authority of the member state where the financial institution that has an operating branch in Greece, additionally covered by the F.G.D, has its venue, prepares a list of creditors/depositors on the grounds of the feedback provided by the respective financial institution. Thereinafter, and after the relevant reductions by set off according to article 44 par. 3, advances the respective compensations that pertain to the non available deposits within three months from the date when these deposits became non available, according to the provisions of par.1 of this article.

d) In extraordinary cases and after the application of F.G.D, the Bank of Greece is able to approve two at the maximum extensions of the above-mentioned deadline which cannot exceed three (3) months.

e) The F.G.D. cannot invoke the deadlines of paragraphs 2 and 3 in order to deny the payment of the guarantee to the depositor who was not able to obtain on time his compensation.

The claim of depositors against the F.G.D. prescribed after a five-year period from the expiry of the last extension, according to the article 45, paragraphs 2 and 3.