ADR WITHIN BANKING AND FINANCIAL DISPUTES. THE ITALIAN PERSPECTIVE.

1. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 ADR WITHIN BANKING AND FINANCIAL DISPUTES.THE ITALIAN PERSPECTIVE. AVV. GIORGIO GRASSO GELEX LAW AND ACCOUNTING FIRM ROME - ITALY

2. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 "SINGLE ENTRY POINT" OR "UMBRELLA ORGANIZATIONS" A "single entry point" could improve consumers' access to ADR.On first approach, a single entry point could encourage the use of ADR, however we do not believe that the solution of using said single entry point is feasible. The Italian experience demonstrates that banking and financial disputes should be handled by ADRs specialized in the respective sector, to guarantee competence and professionalism for users (and time saving). Therefore, the single entry point could be used to simply indicate to users which sector-specific ADR they should address their claims to.

3. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Italian experience …BENEFITS- Opportunity to re-focus on business relation- Increase the number of adr cases that are settled amicably, hence the saving of social costs

4. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 We would recommend strengthening both FIN Net, the European Commission network that handles cross-border disputes, and the European Consumer Centres Network (ECC-Net), the European network that provides information on cross-border purchases, so that they same may work towards making consumers aware of their rights.

5. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Italian banking regulator (Bank of Italy) and investment service regulator (Consob) have set in place their own ADR systems, which flank the industry or users specific ones.- ABF Arbitro Bancario Finanziario- Consob’s Conciliation Board for those relating to investment servicesConciliatore BancarioFinanziario Association - “Ombudsman-Giurì bancario”- The “Conciliatore BancarioFinanziario” (Banking and Financial Conciliator)

6. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 DUTY TO INFORMIn ABI’s opinion, businesses should be required to inform consumers that they are part of an ADR scheme.With particular regard to banking and financial services, current regulations in Italy envisage obligations to inform customers.Said obligations, as regards investment services, require disclosure of the ADR set in place by Consob in the contract. Furthermore, the Supervisory instructions of the Bank of Italy on the transparency of bank transactions (29 July 2009) envisage the obligation to include information on the existence of the ABF in several accessory documents of the contract with the customer.In this regard, information sheets must also contain “the contractual clauses that regard the out-of-court means of protection that customers may utilize”.

7. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Arbitro Bancario Finanziario (ABF)- public- established by law- Value limit: EUR 100,000.00 - three Panels : Milan, Rome, Naples (territorial competence)- Time limit: No dispute concerning transactions or actions pre-dating 1.1.2009 may be submitted- prior formalities to be complied with: In order to appeal to the ABF, the customer must have already gone through the intermediary’s own complaint procedure- consumer fee : € 20. If the ABF finds for the appeal, even in part, the intermediary must repay the claimant for the contribution- recommendation, not binding on either party - on 2011 2,760 applications. 62% of recommendation in favor of consumers.

8. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Arbitro Bancario Finanziario (ABF)- When the ABF finds that an intermediary has failed to comply with a decision, it publicizes the non- fulfillment on the website of the ABF. Furthermore, the intermediary itself is supposed to publicize its own non- fulfillment in two daily newspapers with a national distribution.Furthermore, the Banca d’Italia examines and assesses the outcomes of the appeals for aspects that may be relevant to banking and financial supervision.- Decisions on complaints to the ABF are taken within at most105 days- Languages in which a complaint can be made : Italian, English (the recommendation shall be issued in Italian)- The Banca d’Italia publishes an annual report on the activity of the ABF deciding body.

9. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 The “Conciliatore BancarioFinanziario” Association leads and coordinates 3 different Alternative Dispute Resolution mechanisms CONCILIATORE BANCARIO-FINANZIARIO Associazione per la soluzione delle controversie bancarie, finanziarie e societarie - ADR(Association for dispute resolution over banking, financial and corporate matters) MEDIATION ARBITRATION JUDGEMENT Arbitrators Independent Mediators (on regional basis) Ombudsman

10. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 The Conciliatore Bancario Finanziario (Mediation Banking and Financial Association)It is the most recent service provided by Banks to their customers and to consumers in generalAssociation established by the 10 main Italian Banking groups with the support and the coordination of the Italian Banking Association - ABI Conciliatore BancarioFinanziario

11. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Original Mission:Introducing a specific mediation body dedicated to extra-court mechanisms for dispute resolution, over banking and financial issues The “Conciliatore BancarioFinanziario” is an ADR mechanism adding new specific services to the operational chart of the “Ombudsman-Giurì bancario”, formed in 1993 by the Italian Banking system

12. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 The “Ombudsman”core service areaIts mission is to pass judgment on disputes between Banks and Clients, out of the ordinary justice In 2011 this Association, in its role as Ombudsman-Giurì Bancario, has received 500 claims and has released 600 decisions, also counting claims received the preceding year.Of the latter, 27% were in favour of the claimant, 17% were in favour of the financial intermediary and 56% were classified as inadmissible, mainly because they fell into the sphere of competence of the Arbitro Bancario Finanziario.

13. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Ombudsman – Giurì bancario (Banking Ombudsman)- private- voluntary scheme- Value limit: EUR 100,000.00- Time limit: No longer than 2 years since the date of theoccurrence- prior formalities to be complied with: Clients have first to attemptresolving the dispute through the bank’s claims office- no consumer fee- decision upholding or rejecting the complaint- binding on the financial institution but not the consumer- average time for ADR scheme to resolve a complaint : 3–4 months- Languages in which a complaint can be made : Italian, French, English, Spanish (the decision shall be issued in Italian)- Since 15 October 2009, competence is restricted to financeoperations (investment, placement, etc.).

14. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 The “Mediation” core service area Technically Mediation represents a form of alternative dispute resolution aiming to assist two (or more) disputants in reaching an agreement thanks to the assistance of a third, neutral party: the MediatorIt is NOT a Judgment stating which party is wrong or rightIt is NOT a Transaction, where parties can get to an agreement without the assistance of a neutral

15. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 The Mediator Legal requirements: a) professional competence: 1) professors of Law or Economics 2) professionals put on the Law List, the Roll or on Registers (such as: lawyers, professional accountants, notaries) 3) retired judges 4) or, possessors of a specific training as required by the Italian Ministry of Justice; b) Being an honorable person

16. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Requirements as per the “Conciliatore BancarioFinanziario”: - specific professional competence - recognized dignity - particular character traits - availability to attend training Model adopted by the “Conciliatore BancarioFinanziario”: organized on regional basis The importance of the Mediator for the success of the dispute resolution being able to assist the parties in finding a solution based on the satisfaction of their mutual interests

17. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Arbitration and Mediation Chamber within the Italian NationalCommission on Companies and the Stock Exchange (CONSOB)Legislative Decree No. 179 of 2007 on the institution of anArbitration and Mediation Chamber within the Italian NationalCommission on Companies and the Stock Exchange (CONSOB)provides for the establishment of a chamber of mediation and arbitration for resolving disputes between investors and brokers, because of violation by the brokers of requirements concerning information, fairness and transparency in contractual relationships with investors, and a system of compensation for damage suffered by investors and a special guarantee fund.The legislation provides that the Chamber of Conciliation andArbitration of CONSOB can make use of the mediation servicesof the mediation bodies entered in the Register of the Ministry ofJustice.

18. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Mediation and Banks Positive outcomes from encouraging mediation: a) image: it shows the Banks’ will to make a step forward to meet their clients’ requests b)resolving disputes in a cost-effective way: - legal costs (source: ABI) only direct costs have been taken into consideration, such as: - legal administrative acts costs - lawyers’ fees (reduced by 30%)

19. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 c)Maintaining your business relations with a Clients: - going to a court will determine the loss of a client - Mediation agreement: it can go beyond the resolution of a factual dispute covering different aspects of the complex relationship between banks and clients - support of Marketing business areas in “creating” new products and services to keep customers’ loyalty and satisfaction d) Saving a substantial amount of time in solving disputes: - avoiding uncertainty in the relationship between the parties - possibility of using economic resources e) Avoiding discriminatory practices

20. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 f) Avoid going to court g) Acquisition of elements helping the management of a company - operative effectiveness of pre-cases - possibility of revising contractual clauses - provisions - innovatory reference solutions Nutshell : Improving relationship between Banks and their Customers “Turn your dispute from a business threat … into a business opportunity”

21. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Mediation attempts and outcome in all fields in Italy in 2011 Total 30.000 Positive : 53% Negative : 47%

22. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 Mediation attempts and outcome at the Conciliatore BancarioFinanziario in 2011. Total 300 Positive : 65% Negative : 35%

23. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 On March 2011 it was introduced in Italy mandatory mediation for several matters (included banking and financial disputes) (i.e. Mediation attempts as a requirement before any possible subsequent Court action). This had produced a significant increase of mediation requests. BUT … After the declaration of unconstitutionality (October 2012) of legislation which established mandatory mediation in several matter (banking and investment disputes included) - dramatic reduction up to 90% of banking and financial mediation cases - the ABF and Ombusdman maintained the previous flow

24. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 • “mediation”: a new way in problem solving, a new mentality for dispute resolution • Mediation reaches high standards and achieves remarkable results abroad • It represents a new “profession” to mediators and bankers • Mediation training within banks is considered necessary • Cost saving (not necessary the legal assistance) • Also necessary is creating dedicated business areas to Mediation in the banking industry • Introducing mediation clause in banking contracts is considered of utility (in Italy certain banks mention just the possibility to go to mediation) • Consumers should bear some costs, even if insignificant, to avoid the misuse of ADR schemes

25. PRAGUE, CZECH REPUBLIC 7 JUNE 2013 THANK YOU VERY MUCH FOR YOUR ATTENTION! AVV. GIORGIO GRASSO, PHD PARTNER G.E.LEX LAW FIRM ROME - ITALY TEL. : +39 06 36004333 FAX : +39 06 99331499 EMAIL : GIORGIOGRASSO@GELEX.IT WEB : WWW.GELEX.IT