Spain: Draft Bill setting up the Independent Authority for the Defence of Financial Customers
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On 14 December 2023, the Draft Bill setting up the Independent Authority for the Defence of Financial Customers (hereinafter, the "Draft Bill") was published. The Draft Bill, which resumes the Bill approved by the Congress on 16 December 2022 (which perished due to the snap election), includes the amendments proposed in the parliamentary process and gives a definitive boost to a regulation which, according to the Government, aims at "completing the system for the protection and inclusion of financial customers" by creating a single financial dispute resolution center”.
As we analyzed in our last Newsletter (check it here), the Draft Bill confirms the creation of an Independent Administrative Authority for the Defence of Financial Customers (hereinafter, "AIDEFI") which will assume the supervisory role over the banking, stock market and insurance sectors which, taking over the supervisory functions of the Bank of Spain, the National Securities Market Commission and the Insurance Supervisory Authority, respectively).
Please find following a brief summary of the most relevant amendments introduced with respect to the Draft Bill impacting the insurance sector:
1. Extension of the definition of "complaint" (vid. article 2.3): the Drat Bill has amended the "Definitions" chapter to include, within the concept of "complaint", those that "have no economic content" such as claims related to lack of information or non-compliance with codes of conducts by financial institutions which cannot be economically quantified.
2. Extension of the exclusions to "technical" matters not related to financial transparency [vid. article 3.g)]: the chapter on exclusions in the Draft Bill is amended to exclude from the scope of the Draft Bill those insurance matters whose resolution "necessarily requires the assessment of experts with specialised knowledge in a technical matter outside the regulations on transparency and customer protection or financial best practices". The role of the AIDEFI is therefore reserved for matters related to transparency and good financial practices.
3. Out-of-court dispute resolution system (vid. article 5, paragraphs 3 and 4): the decisions of the AIDEFI will now be overseen by civil courts (and not administrative courts, as provided for in the previous Bill). In addition, the Draft Bill has now recognised legal standing to financial institutions, which may also bring the dispute before the civil courts ("The client and the financial institution may bring the dispute before the civil courts for the recognition of their rights in cases of non-binding favourable resolutions, when these are not accepted by the financial institution, or unfavourable ones").
4. Obligation to motivate the decision (vid. article 41.1): the Draft Bill includes the obligation of the AIDEFI to duly motivate the deciding reasons ending the administrative procedure.
5. Enforceability of binding resolutions when the amount is lower than EUR 20,000 (vid. article 42): the Draft Bill states that any binding resolution issued by the AIDEFI of less than EUR 20,000 will be directly enforceable. The financial institution will have 30 working days from the notification, to comply with the AIDEFI's resolution and provide the documentation proving such compliance.
6. New fee to cover AIDEFI's activity (vid. Additional provision 1º): the Draft Bill extends and details the regulation of the fee that will finance the "expenses generated by the activity" of AIDEFI. This fee, which will accrue on 31 December of each year, changes from a fixed fee of EUR 250 per complaint to a system that takes into account the number of complaints generated by each financial institution and the number of total complaints filed with the AIDEFI and the expenses incurred by the latter, thus encouraging the swift resolution of complaints and penalising hypothetically non-compliant institutions (see section 7). It also includes the obligation to make an advance payment of the fee during the month of January of each financial year, which will reduce the amount of the fee to be paid that year (vid. section 10).
7. Claims against the AIDEFI will be heard in a new expedite proceeding (“Juicio Verbal”) [vid. Final provision 2º]: the Draft Bill adds a new article in the Civil Procedure Act (Article 447 ter) which sets up new expedite proceeding for claims against binding decisions issued by the AIDEFI that exhaust the administrative procedure.
The Draft Bill, which has been received with certain doubts and criticisms amid the insurance sector (for example, UNESPA and the General Council of Insurance Intermediaries Associations have publicly expressed their skepticism about the new regulation) since it may bring a spike in litigiousness and a cost, is currently undergoing the public hearing phase until 26 December 2023 (vid. the Treasury's website here).
