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30 june 2022, 11:00
The Financial Ombudsman Service (FOS) proposed changes to the legislation in terms of improving the procedure for financial institutions to appeal against Financial Ombudsman’s decisions. The initiative was voiced by Financial Ombudsman Viktor Klimov following a discussion at the session “Open dialogue. Legal problems arising in disputes between consumers of financial services and financial institutions” held by the Financial Ombudsman Service within the framework of the 10th St. Petersburg International Legal Forum.
According to the Law on the Financial Ombudsman, in case of disagreement with the Financial Ombudsman’s decision, a financial institution shall be entitled to apply to court in the manner prescribed by the Russian Civil Procedure Law. At the same time the Russian Civil Procedural Code does not contain separate provisions regulating issues of appealing against Financial Ombudsman’s decisions by financial organizations.
Viktor Klimov said that there are cases when financial institutions do not provide the requested documents in full to the Financial Ombudsman, but subsequently provide them to the court when appealing against the Financial Ombudsman’s decisions on satisfaction of financial services consumers’ claims. “Courts accept such evidence and overturn Financial Ombudsman’s decisions. Currently, in every fifth application by a financial institution to challenge a FOS decision, the financial institution provides evidence to the court that was not previously provided to the Financial Ombudsman,” he added.
As a consequence, a situation arises where a financial institution first deprives the financial ombudsman of the opportunity to review a dispute with a consumer of financial services properly, and later benefits from its unlawful behaviour.
“We believe that this issue needs to be regulated at the legislative level. For example, to establish the inadmissibility of the provision of evidence by financial institutions to the court, which were not presented to the Financial Ombudsman at the stage of out-of-court dispute resolution,” he said. Viktor Klimov added that such a rule should not apply to cases where a financial institution justified the inability to submit evidence to the Financial Ombudsman during its consideration of the appeal of a consumer of financial services for reasons beyond its control and the court recognized these reasons as valid.
“This will prevent abuse on behalf of certain financial institutions that submit documents that are essential for a proper consideration of an appeal of a consumer of financial services only at the stage of appealing against the Financial Ombudsman’s decision,” Viktor Klimov noted. In addition, according to the Financial Ombudsman, it seems unacceptable to impose on consumers of financial services the costs of a financial institution associated with its appeal to court to appeal against the Financial Ombudsman’s decision, if it is reversed. For example, it concerns the costs of forensic examinations carried out at the request of the financial institution.
