The Draft Bill aims to ensure compliance with regulations governing relations between consumers and financial institutions as well as to streamline out-of-court channels for individual settlements.
To this end, the main key features introduced can be summarised as follows:
- The creation of an independent administrative authority for financial services consumer protection (hereinafter, the “Authority”). This Authority will respond to the need to unify the Spanish out-of-court dispute resolution system in a single financial services consumer protection agency. So far, the dispute resolution system is divided between the complaints services of the Bank of Spain (“BdE”), the National Securities Market Commission (“CNMV”) and the Directorate-General for Insurance and Pension Funds (“DGSFP”).
Said Authority’s decisions will be binding if the amount claimed is under €20,000, and the concerned financial entities will have to pay a €250 fee for each claim accepted for processing with a view to incentivise amicable settlements of the submitted claims.
- This way, a personalised assistance principle is introduced, which takes clients’ personal circumstances into consideration.
1. The creation of an independent administrative financial services consumer protection authority
The Authority will be an autonomous and independent agency whose purpose will be to resolve claims filed by clients for non-compliance with rules of conduct, good financial practices, or the inclusion of unfair contractual terms by financial institutions.
Scope of application
The Authority will govern financial institutions, i.e., individual or legal entities who are subject to:
(i) the supervision by the BdE, the CNMV or the DGSFP or similar agencies, including bodies from other EU Member States or a third country operating in Spain exercising freedom of establishment;
(ii) Law 22/2007, of July 11, 2007, on distance selling of financial services for consumers;
(iii) Law 2/2009, of March 31, 2009, regulating the subscription of loans and mortgage financing and intermediation services for the execution of loan or credit agreements.
(iv) Law 16/2011, of June 24, 2011, on consumer credit agreements;
(v) Law 5/2019, of March 15, 2009, on real estate credit agreements; and
(vi) once adopted, the European and Council Regulation on Markets in Crypto assets, amending Directive (EU) 2019/1937 (or the “MiCA” Regulation).
Therefore, claims may be related to all types of financial products, including banking, securities and insurance, consumer credit, real estate and mortgages, provided by all types of financial institutions and intermediaries (supervised or not), including companies in the Fintech sector. Entities that provide services on crypto assets in accordance with the MiCA Regulation will also be subject to the new Authority.
In turn, claims may be filed by both individual and legal entities, or unincorporated entities, both Spanish or foreign, including potential clients involved in pre-contractual discussions, as well as institutional investors, associations and organisations acting in the interest of their clients, when such interests or rights have been infringed during the provision of a financial service or in the pre-contractual phase.
Dispute resolution procedure
If the claim filed by the client with the customer service department of the financial institution is rejected or has been completely or partially denied, or if a month has elapsed without a decision, the client may turn to this Authority, as long as the claim was not filed against the financial institution over a year ago, in which case it would be inadmissible. This service will be free of charge and the assistance of a lawyer or court representative will not be mandatory.
The proceedings will be brief, as the time limit is capped at 60 calendar days to investigate the case, and 30 calendar days to issue a decision, although for particularly complex cases the procedure can be extended up to a maximum of 90 days.
Another noteworthy aspect is that there’s a shift in the burden of proof during these proceedings, in favour of the consumer, since it is placed on the financial entity.
In any case, clients will still be able to file any legal or out-of-court claims they see fit, although this is not an option if there is an ongoing claim that is being processed by the Authority.
Applicable fees and penalty system
The financial institutions receiving the claim must pay a €250 fee for each claim accepted for processing.
Similarly, for claims under €20,000, the decisions will be binding for the financial institution, and it will have 30 days from its issuance to comply, as there is no recourse to appeal through administrative channels. When the claim is equal to or greater than €20,000, the decisions won’t be binding for any of the parties, although if it is unfavourable for the financial institution, it must expressly notify its acceptance, or not, within a 30-day period from the issuance of the resolution, providing any necessary documentation to justify redress or its grounds for non-acceptance.
The new Authority will also have the power to impose sanctions in the event of non-compliance with binding decisions.
The financial institution concerned must update the documentation with their clients, including pre-contractual documentation, with the new aspects introduced by the Draft Bill, regardless of the format, as well as the information contained on their website regarding customer service.
2. The introduction of the principle of personalised assistance
Lastly, the Draft Bill also refers to the need for customer services to be provided by financial institutions in a personalised manner, taking into account the personal circumstances of its clients, such as age and digital skills, as well as certain aspects of the area in which they live and the availability of different financial customer service channels, whether on-site or digital, permanent or part-time.