Alternative Dispute
Mechanisms offer a pragmatic and low cost scheme of consumer
protection in cross-border financial services. They are not
intended to substitute but to complement the full judicial process.
Their importance arises in particular from the growing use of
the internet as a means of buying and selling financial services.
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Context Consumer trust is important in
all markets but perhaps more so in financial services than others
because of the debtor/creditor or long term nature of the relationship.
This trust can be earned by financial institutions delivering on
their "promises" but sometimes, for all sorts of reasons,
this does not happen. In those circumstances consumers need to know
that there is some mechanism in place to help them resolve their
problems. Without this "backstop" consumers will be less
likely to use new products or suppliers particularly from other
countries, in which case the aim of a single market for financial
services will become difficult to realise.
The Brussels and Rome Conventions and
in due course the Regulations which will supersede them aim to decide
the questions of which court and whose laws apply to cross border
disputes. These are important issues which do need to be addressed,
however, the rights which they aim to give to consumers are in reality
illusory. The vast majority of dissatisfied consumers do not take
their complaint to court because the process is too slow, not user-friendly
and disproportionately expensive. When it comes to cross border
complaints the position is even worse.
