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Financial Arbitrator – basic information
The task of the Financial Arbitrator (and the main reason of creation of this dispute resolution body) is to provide fast, free of charge and efficient dispute resolution between individuals and specific financial institutions.
Office of the Financial Arbitrator
When is the Financial Arbitrator unable to hear a dispute?
Proceedings before the Financial Arbitrator
How can I use the services of the Financial Arbitrator?
Financial Arbitrator
The Financial Arbitrator is an out-of-court dispute resolution body competent to decide disputes between financial institutions and its customers free of charge. The dispute may be initiated only by the customer (consumer). The Financial Arbitrator has been founded as of 1 January 2003 by the Act No. 229/2002 Coll., on Financial Arbitrator, in the course of harmonization of the law of the Czech Republic with the European legislation.
As of 1 July 2011 the Financial Arbitrator shall be appointed by the Government on a proposal of the Minister of Finance, for a 5-year term of office. The Financial Arbitrator shall be responsible to the Government for the exercise of its duties. Only irreproachable, fully legally capable persons of good reputation, sufficient qualifications and experience may be appointed Financial Arbitrator or Deputy Financial Arbitrator.
Monika Nedelková has been appointed the Financial Arbitrator by the Government on 16 November 2011 by the ruling No. 1157; her term of office started on 16 November 2011.
Deputy Financial Arbitrator
The Deputy Financial Arbitrator appointed by the Government on a proposal of the Minister of Finance under same conditions as the Financial Arbitrator shall act on behalf of the Financial Arbitrator to the full extent of the Financial Arbitrator’s competence and responsibilities during his/her absence.
The Financial Arbitrator may permanently confer the exercise of some of his/her decision-making powers on the Deputy Financial Arbitrator.
Lukáš Vacek has been appointed the Deputy Financial Arbitrator by the Government on 14 January 2015 by the ruling No. 24; his term of office of 5 years started on 8 March 2015.
Office of the Financial Arbitrator
The tasks associated with the professional, organisational and technical arrangements of the Financial Arbitrator’s activities shall be performed by the Office of the Financial Arbitrator, which shall form a government agency, an accounting entity, and its revenue and expenditure shall form a part of the budget chapter of the Ministry of Finance. The head of the Office of the Financial Arbitrator shall be the Financial Arbitrator. The Office of the Financial Arbitrator has been founded as of 1 July 2011 based on the Act No. 180/2011 Coll.
Competence
The Financial Arbitrator is an out-of-court decision-making body founded by the government authorized to decide specific disputes related to the financial market. According to the Act No. 229/2002 Coll., on Financial Arbitrator, as amended, the Financial Arbitrator is, subject to further conditions and provided that a Czech court is otherwise competent to decide the dispute in question, authorized to decide disputes between the consumer and:
a) a payment service provider arisen in connection with offering and providing payment services – e.g. dispute concerning an incorrectly executed payment transaction (malfunction of the ATM, incorrect debiting or crediting of the account, delayed execution of the payment transaction, refusal of a payment order), unauthorized payment transaction (unauthorised use of a credit card or internet banking), termination of a payment account, fee charged for a payment service;
b) an electronic money issuer arisen in connection with issuing and reverse exchange of the electronic money - e.g. dispute between a holder of the pre-paid public transportation card and the public transportation operator;
c) a creditor or an intermediary arisen in connection with the offering, providing or mediation of the consumer credit or other credit, loan or other financial service – e.g. dispute between a creditor and its client concerning the rescission of contract, or the fee charged for early repayment of the credit;
d) a person managing or administering a collective investment fund, or offering an investment in the collective investment fund or in a comparable foreign investment fund arisen in connection with managing or administering the collective investment fund, or with offering an investment in the collective investment fund or a comparable foreign investment fund;
e) an insurer or an insurance intermediary in connection with distribution of life insurance and in connection with exercising rights and obligations from life insurance;
f) a money exchange provider arisen in connection with the money exchange – e.g. dispute concerning exchange rate or fee;
g) a building savings bank or an intermediary arisen in connection with the offering, providing or mediation of the building savings – e.g. dispute concerning termination of the building savings contract by the building savings bank, change of the building savings contract by the building savings bank (e.g. decrease of the interest on deposits or increase of the fee for keeping the building savings account), fees charged, amount of the state contribution;
h) a person providing investment services in connection with providing investment services – e.g. dispute concerning management of a customer's assets including an investment instrument based on own discretion in accordance with the contract [portfolio management], custody and administration of the investment instruments including the related services where the securities and book-entry securities issued by an investment fund or a foreign investment fund are concerned, reception and transmission of orders in relation to one or more financial instruments and providing of investment advice concerning investment instruments;
i) a person which maintains an account other than payment account when maintaining the account other than payment account;
j) a beneficiary of a fixed lump-sum deposit when accepting or returning the fixed lump-sum deposit
k) a pension company or an intermediary in connection with the offering, providing or mediation of state-contributory supplementary pension insurance;
l) a pension company or an intermediary in connection with the offering, providing or mediation of supplementary pension savings;
m) a person providing or distributing a pan-European personal pension product in connection with the providing or distributing a pan-European personal pension product;
n) a person providing a dynamic currency conversion service offered to the payer through an ATM or at the point of sale of goods or providing services before the payment transaction is initiated, in connection with the providing that dynamic currency conversion service;
o) the provider of a long-term investment product when providing that product.
Conclusion of an arbitration agreement shall not prevent the competence of the Financial Arbitrator.
Please find examples of the disputes in competence of the Financial Arbitrator here.
When is the Financial Arbitrator unable to hear a dispute?
First of all, the Financial Arbitrator cannot decide a dispute if the complaint does not meet the requirements set up by the Financial Arbitrator Act. Secondly, the Financial Arbitrator is not authorized to hear the dispute if
a) the Financial Arbitrator is not competent to decide the dispute,
b) the dispute has been decided in merits by the court of competent jurisdiction or the court proceedings have been initiated,
c) the dispute is currently being heard or has been decided by the Financial Arbitrator,
d) the dispute has been decided in merits in the arbitration proceedings or the arbitration proceedings have been initiated.
Please find examples of the disputes out of competence of the Financial Arbitrator here.
Proceedings before the Financial Arbitrator
The proceedings before the Financial Arbitrator shall not be subject to a fee. The Financial Arbitrator shall decide disputes based upon his/her best knowledge and belief, impartially, fairly, without undue delays and only on the basis of the facts established in accordance with the Financial Arbitrator Act and other legislation. The Financial Arbitrator shall not be bound by the complaint and shall procure evidence on his/her own. The Financial Arbitrator shall be entitled to request any and all evidence from the parties to support their assertions, including oral explanations.
The Financial Arbitrator shall decide the dispute within 30 days of the date of the commencement of proceedings; in particularly complicated cases, the Financial Arbitrator shall decide no later than within 60 days; if, due to the nature of the dispute, the decision cannot be made within the deadline, the Financial Arbitrator may reasonably extend it. In the proceedings, the Financial Arbitrator shall proceed pursuant to the Financial Arbitrator Act and, adequately, pursuant to the Act No. 500/2004 Coll., Administrative Procedure Code, as amended.
The Financial Arbitrator shall decide the dispute in merits by an award. An award may be contested by an appeal – objections filed with the Financial Arbitrator. The award shall be judicially enforceable and has therefore similar consequences as the court decision. A final decision of the Financial Arbitrator may be contested by filing a lawsuit with the court of law under Sec. 244 Par. 1 of the Act No 99/1963 Coll., Civil Procedure Code, as amended.
How can I use the services of the Financial Arbitrator?
The proceedings before the Financial Arbitrator can only be initiated by the customer. The financial institution is not entitled to file a complaint against its customer.
The complaint may be filed in writing (and manually signed) by post, in electronic form, i.e. by e-mail using a secured electronic signature, or via data box (available to persons with a data box only), in person, i.e. orally if protocolled by the Office of the Financial Arbitrator.
The complaint shall include, in accordance with Sec. 10 Par. 1 of Financial Arbitrator Act, the following:
a) designation of the parties (identification of the complainant and the institution against which the complaint is filed),
b) evidence proving that the complainant has unsuccessfully requested remedies from the institution (evidence proving that the institution rejected the request of the complainant, or evidence proving that the institution did not reply to the complainant´s request, i.e. the copy of the request and the proof of delivery, if available),
c) complete and comprehensible description of the case (the subject-matter of the dispute, specific circumstances of the dispute and the process of consulting the dispute with the institution),
d) evidence or designation of evidence (the evidence may particularly consist of documents, testimony, or expert evidence – e.g. the contract concluded between the complainant and the institution, terms and conditions, statement of account, documented communication between the complainant and the institution; evidence at the disposal of the complainant shall be attached to the complaint; other evidence shall be referred to e.g. by the title, date, person who has it at his/her disposal, etc.),
e) remedy requested (a remedy available in proceedings before the Financial Arbitrator shall be the fulfilment of the obligation imposed by a statute, legal relation or breach of law, e.g. reimbursement of the money transferred in breach of contract, reimbursement of the fee imposed in breach of contract, declaring the money exchange invalid and reimbursement of the money paid, interest on late payments, damages etc.; the complainant may request a decision stating whether a specific legal relationship or a specific right exists or not, e.g. declaring the contract or its specific provision invalid, provided that there is a qualified need of such declaratory decision),
f) statement that the complainant has not filed a lawsuit with the court of competent jurisdiction, or a statement of claim with the arbitration court or the arbitrator in the matter, and that he/she has not entered into a settlement agreement regarding the subject of the dispute, and that he/she is aware that the award issued by the Financial Arbitrator shall be binding,
g) power of attorney, provided that an representative of the complainant´s choice acts on behalf of the him/her in the proceedings,
h) date and signature of the complainant.
You may use the Complaint Filing Tutorial or download a form to file a complaint.
History
The Financial Arbitrator has been founded as of 1 January 2003 by the Act No. 229/2002 Coll., on Financial Arbitrator. The establishment of the Financial Arbitrator has been a part of the effort to harmonize the law of the Czech Republic with the European legislation before being accepted to the European Union. The demand of harmonization followed particularly from
- Art. 10 of the Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers (repealed by the directive 2007/64/EC of the European Parliament and of the Council),
- Commission Recommendation 98/257/EC of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes,
- Commission Recommendation 2001/310/EC of 4 April 2001 on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes,
- Regulation (EC) No 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro.
To implement the requirements set up by the above mentioned legislation, a special statute, i.e. the Financial Arbitrator Act, has been adopted in order to enable out-of-court dispute resolution of disputes arisen in connection with the transfer of funds under Act No. 124/2002 Coll., on Transfers of Funds, Electronic Payment Instruments and Payment Systems (the Payment System Act). At the same time, the Payment System Act stipulated that in case of a dispute between the transferring institution and its client the client was entitled to file a complaint with the dispute resolution body founded under a special act, i.e. the Financial Arbitrator. The same applied to the disputes between the issuers and holders of the electronic payment instruments in connection with the issuing and using electronic payment instruments. The right of the customer to file a complaint with the Financial Arbitrator was without prejudice to the customer´s right to file a lawsuit with the court of law.
By the Financial Arbitrator Act a new specialized authority has been founded in the Czech legal system authorized to decide disputes between private persons (from the personal point of view) and from the private law area (from the substantial point of view), i.e. disputes between persons specified by law where the subjective private rights are concerned (from the point of civil law legal classification). See the Supreme Administrative Court judgement of 19 April 2007, case number 11 Ca 116/2007, reference number 2 Afs 176/2006 – 96. From the civil law process point of view the proceedings before the Financial Arbitrator are optional and initiated on proposal only. As to the position of the Financial Arbitrator, decision-making of the public authority (which is not, nevertheless, part of the judicial system of the Czech Republic) is concerned where the individual rights of the parties are the subject of the proceedings and as a result an individual administrative act is issued which is binding and enforceable. In compliance with the constitutional statutes, there is a possibility of the court review of the decisions of the Financial Arbitrator (awards, decisions on fines).
The exceptional position of the Financial Arbitrator has been reinforced by making it a mediation body as well. Mediation as a form of dispute resolution is strongly supported throughout the European Union.
In the beginning of the existence of the Financial Arbitrators its costs used to be financed from the budget of the Czech National Bank. The Financial Arbitrator used to exercise its decision-making powers using the assistance of the employees temporarily assigned to the Financial Arbitrator by the Czech National Bank whose budget contained a special “Financial Arbitrator” chapter and who supervised, through this chapter and under an agreement concluded with the Financial Arbitrator, the Financial Arbitrator´s accounting.
There is a constant trend to remove barriers of the Financial Arbitrator´s decision-making powers and to extend areas of Financial Arbitrator´s competence. Along with the adoption of the Act No. 284/2009 Coll., on Payment System, which was enacted particularly in order to harmonize the Czech legislation with the Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market and with the Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems, the competence of the Financial Arbitrator in the area of payment services has been extended by the amendment of the Financial Arbitrator Act. Therefore as of 1 November 2009 the Financial Arbitrator is competent to decide disputes between the payment service providers and payment service users arisen in connection with providing payment services, and disputes between the electronic money issuers and electronic money holders arisen in connection with issuing and reverse exchange of the electronic money.
As of 1 July 2011 the competence of the Financial Arbitrator has been extended by the Act No. 180/2011 Coll. whereby the Financial Arbitrator has become competent to decide
- disputes between creditors or intermediaries and consumers arisen in connection with offering, providing or mediation of the consumer credit,
- disputes between investment funds, investment companies, or foreign investment companies and consumers arisen in connection with collective investment standard funds and special funds which collect money from public (the Financial Arbitrator´s competence in this area has been changed as of 1 January 2015 to cover disputes between persons managing or administering a collective investment fund, or offering an investment in the collective investment fund or in a comparable foreign investment fund and consumers arisen in connection with managing or administering the collective investment fund, or with offering an investment in the collective investment fund or a comparable foreign investment fund).
As of 1 November 2013 the competence of the Financial Arbitrator has been extended by the Act No. 278/2013 Coll. and the Act No. 241/2013 Coll. whereby the Financial Arbitrator has become competent to decide
- disputes between the insurance companies or insurance intermediaries and persons considering to enter into an insurance contract, policyholders, the insured, right holders and appointed persons arisen in connection with the offering, providing or mediating of the life insurance,
- disputes between the money exchange providers and persons considering money exchange, or persons with whom a money exchange has been made.
The Financial Arbitrator Act lays down basic procedural rules applicable to the proceedings before the Financial Arbitrator and in questions it does not cover it refers to the Administrative Procedure Code to be applied adequately. Due to this fact the procedure before the Financial Arbitrator shall be considered specific.
The fact that the activities of the Financial Arbitrator used to be financed by the Czech National Bank in breach of the Community Law had been constantly criticised by the European Commission and the European Central Bank, e.g. in the Convergence Report of the European Commission and the European Central Bank in years 2006 – 2008. The Czech Republic had been required to change the applicable legislation and to harmonize it with the ban of monetary financing and with the request of independence on the national central banks.
Along with the extension of competence of the Financial Arbitrator, i.e. as of 1 July 2011, the Office of the Financial Arbitrator has been founded as a government agency. The Office of the Financial Arbitrator shall perform tasks associated with the professional, organisational and technical arrangements of the Financial Arbitrator’s activities; it shall form an accounting entity, and its revenue and expenditure shall form a part of the budget chapter of the Ministry of Finance. The head of the Office of the Financial Arbitrator shall be the Financial Arbitrator. As of 1 July 2011 the Financial Arbitrator and the Deputy Financial Arbitrator shall be appointed and dismissed by the Government, on a proposal of the Minister of Finance. The Financial Arbitrator shall be responsible to the Government for the exercise of its duties. The Financial Arbitrator shall present annual reports on his/her activities and the costs spent on ensuring thereof both to the Chamber of Deputies and to the Government.
The employment and remuneration of the Financial Arbitrator, Deputy Financial Arbitrator and other employees of the Office of the Financial Arbitrator shall be governed by the Labour Code (until 30 June 2011 the salary of the Financial Arbitrator and the Deputy Financial Arbitrator had been set by the Chamber of Deputies and the salary of the employees of the Czech National Bank carrying out work for the Financial Arbitrator had been set under standards of the Czech National Bank). As of 1 July 2011 the salary of the Financial Arbitrator and the Deputy Financial Arbitrator has been set by the Government and the salary of the employees of the Office of the Financial Arbitrator has been set by the Financial Arbitrator.
List of the Financial Arbitrators in office since 2003:
- JUDr. Ing. Otakar Schlossberger (2003 – 2008)
- Dr. Ing. František Klufa (2008 – 2011)
- Mgr. Monika Nedelková (2011 - )
List of the Deputy Financial Arbitrators in office since 2003:
- JUDr. Petr Scholz, Ph.D. (2003 – 2013)
- Mgr. Lukáš Vacek, MPA (2013 - )
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