Italian regulator introduces new arbitrator for financial disputes

Consob, the Italian regulator, published a statement announcing that the Commission has approved the regulation of the new Arbitrator for financial disputes (ACF) (Resolution No. 19602 of 4 May 2016, being published in the Official Gazette of the Republic).

The regulation allows Consob to start a new out-of-court system for resolving disputes. It is characterised by the mandatory membership of the intermediaries and the decision-making nature of the procedure, similar to the Financial Banking Arbitrator (ABF) of Banca d’Italia. The objective is to provide an effective instrument to directly protect the interests of the investors. The regulation was adopted pursuant to Art. 2, paragraphs 5-bis and 5-ter of Italian Legislative Decree No. 179/2007.

Access to the Arbitrator is completely free for the investor and shorter timelines are anticipated for reaching a decision (90 days following completion of the dossier containing the petition, the observations and the documentation produced by the parties).

In addition to the disputes (up to an amount request of 500,000 euro) relative to the violation of the disclosure, diligence, correctness and transparency obligations required for the intermediaries in their relations with the investors in the performance of investment services and collective investment management, disputes may also be submitted concerning the operators of the equity crowdfunding portals.

An electronic procedure is anticipated for sending and managing the appeal in order to guarantee that the system operates efficiently and promptly. This will allow the investor to be guided during the preparation phase of the appeal, avoiding possibly sending incomplete and inconsistent applications. The system will make it possible to share in real time all the documents produced by the parties during the procedure, ensuring speed and economy in the fulfilments. However, in order to accommodate the needs of those who are less familiar with computer tools (and who do not intend to use the support of solicitors or consumer associations), it will be possible to send hard copies of the applications for two years.

The procedure allows both the investor and the intermediary to provide their reasons, ensuring therefore a full discussion between the parties and ends with a decision by the Arbitrator who, should he accept all or part of the investor’s appeal, can require the intermediary to compensate the damages suffered or the costs incurred to fulfil the deeds considered necessary.

The decision of the board is not binding for the investor who can still turn to the judicial authority. Should the intermediary not implement the decision made, he will be charged with a reputational sanction through the publication of that non-fulfilment.

The Arbitrator is organised so that it is divided into a deciding board and a technical secretariat of Consob with support duties.

The composition of the arbitration board reflects the need to represent the various interests involved. Therefore, in addition to the Chairperson and two members who are appointed directly by Consob, the other two members are also appointed by Consob following designation, respectively, by the National Council of Consumers and Users (CNCU) and the trade associations most representative of the intermediaries.

The adoption of the regulation follows the public consultation held from 8 January to 8 February 2016. On the Consob site, in the Regulation Section, the text of the regulation is published with the relative resolution, the results of the consultation – together with the report which explains the consequences of the new legislation on the regulation, the activity of the businesses and operators and the interests of the investors, provided by Art. 23, paragraph 2 of Law 262/2005 – as well as the contributions received during the consultation.

After the adoption of the regulation, additional activities will continue to ensure that the new Arbitrator, which will replace the Chamber of Conciliation and Arbitration after the summer, can start to operate.

The Consob statement and related information can be found here.

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