EBF advisor: Blazej Blasikiewicz
Publication date: 26 June 2018
The European Banking Federation fully supports European Commissions’ endeavors to set a high level of consumer protection across the EU and the basic view that consumers should be able to ask for compensation for actions violating their rights. Our members follow legal requirements and wish to solve any outstanding disputes with customers in dialogue. Nevertheless, effective court/administrative systems are crucial for any business, therefore any legal act affecting them must be considered with strong attention. In this light, this proposal is not acceptable since it breaches the principle of subsidiarity as well as many basic principles enshrined in juridical systems of EU Member States.
◆ Therefore, the EBF considers that the Commission should withdraw its proposal and that only public authorities dealing with consumer protection issues should be entitled to bring forward collective legal actions to avoid abuse. Moreover, it is EBF’s view that it is not necessary to amend Directive 2009/22/EU as, in general terms, the proposal will increase litigation and legal uncertainty. We base our opinion on the following main topics:
a. Principle of subsidiarity: We consider that representative actions across Member States are a reality (sometimes, in excess). As mentioned in the Commission’s report on the implementation of the Commission Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States (EC Report), compensatory collective redress is available in 19 EU Member States. As it appears from the reading of the EC Report, it is a well-regulated subject in most Member States and there is no actual need for harmonization. Therefore, in light of the principle of subsidiarity, we consider that this subject should be regulated at the Member States level and the Commission should withdraw its proposal.
b. Harmonization: The Proposal states that the Directive shall not prevent Member States from adopting or maintaining in force provisions designed to grant qualified entities or any other persons concerned other procedural means to bring actions aimed at the protection of the collective interests of consumers at national level. This could be problematic becausequalified entities might choose the jurisdiction to litigate regarding the procedural means to bring actions in each member state.
c. Punitive damages and Discovery: As the EU Commission recognized in its Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (Recommendation), elements such as punitive damages, intrusive pre-trial discovery procedures and jury awards are foreign to the legal traditions of most Member States and should be avoided as a general rule. Nonetheless, the Commission disregarded its own recommendations in the proposal. It is EBF’s view that any damages suffered by consumers should be duly proved.
d. Legal costs: The proposal does not include the principle “loser pays”, which is crucial to avoid excessive litigation.
e. “Opt-In” principle: The EC Report reminds that the Recommendation urges Member States to introduce in their national collective redress schemes the principle of “opt-in”, whereby the natural or legal persons joining the action should do so based on their express consent only. It also concludes that even where the opt-out principle is applied there appears to be the perception of a need to distinguish between purely domesticand cross-border cases and to rely more on the “opt-in” principle in cross-border contexts.
f. Settlements: Settlements should be binding for the consumer to reduce litigation. If not, settlements do not lead to finality, and regulating settlements loses its meaning. Moreover, there is no justification to grant consumers any additional rights to redress after an approved settlement exists.
g. Independence: Requirements regarding independence of qualified entities should be more clear, demanding and verifiable by a court. Regarding its funding, third party funding should be prohibited as should be contingency fees arrangements with lawyers.