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26 june 2024, 19:00
The Financial Ombudsman Service (FOS) has prepared a concept of amendments to the Law on Financial Ombudsman in the Russian Civil Procedure Code. The Service’s proposals should solve a number of problems, due to which the goals set for the Financial Ombudsman’s institution have not been fully achieved.
This was reported by Financial Ombudsman Denis Novak, speaking at the session “Legal regulation, practice and prospects of out-of-court resolution of financial disputes”, organised by the FOS within the 12th St. Petersburg International Legal Forum (SPILF).
“The Service, as a working institute for restoring consumer rights in the financial market, has already gained ground. It is logical, if the Russian Civil Procedure Code should have a separate specific chapter, which takes into account the particularities of out-of-court consideration of such disputes by the Financial Ombudsman,” Denis Novak noted.
He pointed out that currently, “when a consumer or a financial institution does not agree with the Financial Ombudsman’s decision, they have the right to appeal to the court, but the procedure for considering such disputes is asymmetrical.”
“If a financial institution goes to court and appeals against the Financial Ombudsman’s decision, it happens in the order of civil proceedings, in the order of lawsuit proceedings. But nevertheless, in this case, we are not a counter-respondent, but an interested party, such is a distinct and unsettled by the Civil Procedure Code arrangement, Denis Novak said.
“And the consumer does not appeal against our decisions at all, he/she just goes through this out-of-court procedure, and then goes with the same ordinary lawsuit against the financial institution,” the Financial Ombudsman commented.
He clarified that such a sequence of actions is proposed, when “the entire corpus of available evidence, circumstances to be considered, first should be considered by the Financial Ombudsman, and only then, if the party does not agree with the decision, they have to go to court.
He indicated that a procedure “similar to the right to review a dispute on newly discovered circumstances” could be set up. “We have proposed to call it a review on newly discovered circumstances and newly presented evidence,” the Financial Ombudsman said, while pointing out that at present the Service does not have the right to review its own decisions.
“The lion’s share of appeals against the Financial Ombudsman’s decisions in courts, as well as new consumer claims are not related to disagreement on any legal issues. We are talking about the presentation of either new evidence or the appointment of another expert examination, but only in court, a forensic examination,” Denis Novak emphasised.
“The Financial Ombudsman was provided with some of the evidence, and some of it was withheld or forgotten about. Then in court it appears either in a statement of appeal against our decision on the part of the financial institution (suddenly it pulls out some more evidence that, for example, they have already paid part of the money), or the consumer also pulls out some new evidence that we have not seen and, of course, could not take into account, and our decision, of course, does not take it into account,” the Financial Ombudsman indicated.
With regard to the proposed change in the procedure for providing expert examination and challenging its results, Denis Novak noted that “a mere disagreement with the results of an expert examination, which we have qualified specialists conduct, should not be grounds for the court to appoint a new expert examination.”
“Such disagreement should be motivated and justified. The disagreeing party must submit a review of this expert examination. In this case, the review will have to be made by a person with the required qualifications. And if this review reveals that there are some flaws in the expert examination, which had been conducted by the Financial Ombudsman, it is only then that a forensic examination should be ordered,” the Financial Ombudsman stressed.
Denis Novak emphasised that this innovation “will significantly reduce the number of unjustified revisions of Financial Ombudsman’s decisions in courts while preserving the right of the parties to judicial protection”.
The practice of reviewing the Financial Ombudsman’s decisions in courts delays the outcome of the case and contradicts the principle laid down when the Service was established. For consumers, the consideration of disputes in the out-of-court procedure should be “fast, free and fair”, the Financial Ombudsman said.
He also noted that much was said at the forum about unfair practices, as well as some business models used by financial institutions, which the Financial Ombudsman identifies systematically. According to Denis Novak, taking into account the human rights function of the institution, it would be advisable to add to the Financial Ombudsman the power to appeal to the court for protection of rights of an indefinite circle of persons, by analogy with the commissioners for human rights or for protection of entrepreneurs’ rights.
Thus, having identified some systemic violation of the rights of consumers of financial services, the Financial Ombudsman could follow the model of appealing to the court to protect the rights of an indefinite circle of persons to ensure that a particular position is already formed in court practice, so that it can further be scaled to protect the rights of particular citizens, Denis Novak clarified.
