Have you lost an absolutely certain investment? Did your insurance company not pay you the promised benefits? Were you charged for a payment you didn’t make? The company you used for these services is not cooperating? You don’t have to go to court right away. Contact a financial arbitrator instead. In this article, we’ll tell you what a financial arbitrator is, how they make decisions, and how they can help you resolve a dispute with a financial institution.
A financial arbitrator is a non-judicial body that specialises in the out-of-court resolution of disputes in the field of finance and financial services. Its main function is to adjudicate disputes between consumers and financial institutions relating to credit, investments, insurance, etc.
The financial arbitrator operates independently of the judicial system. This is to ensure its objectivity and impartiality in resolving disputes. At the same time, it decides only at the request of the consumer, not on its own and not at the request of a financial institution.
Its activities are regulated by the Financial Arbitrator Act. This law defines his duties, the rights and obligations of the parties to the dispute vis-à-vis the financial arbitrator, the course of the proceedings, the nature of the decision or the possibility of imposing a fine.
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The Financial Arbitrator was created in 2003 in response to the unification of local law with EU law, as the EU recommended before our accession that we ensure the possibility of out-of-court dispute resolution in money transfers. It wanted to ensure that consumers could have recourse to a special body (in addition to the traditional courts) in the event of disputes with financial institutions.
Tip: European Union law can be a rather controversial topic. It touches all sorts of parts of our lives and affects many areas of our national law. How much power does the EU have and on what principles does EU law work? Find out in our article.
The Financial Arbitrator and his/her deputies are appointed by the Government on the proposal of the Minister of Finance for a five-year term of office. Since 2011, this function has been performed by Mgr. Monika Nedelková, who has already been appointed three times. Her deputy is Mgr. Lukáš Vacek. The deputy represents the arbitrator and, in his absence and to the full extent of his powers and duties.
The arbitrator has the duty to perform his/her duties independently and impartially and is accountable to the Government for the performance of his/her duties. The annual report submitted to the Chamber of Deputies and the Government also serves as a control mechanism. It provides information on individual cases and the costs incurred.
The Arbitrator and his deputy are in charge of the Financial Arbitrator’s Office, which is responsible for various organisational, professional and technical activities. It thus serves as a kind of back-up for the performance of the work of the arbitrator himself.
Only a person of full legal capacity and good character with a good reputation and sufficient experience may become an arbitrator or his representative. This person must have a Master’s degree in law and at least five years’ experience in the financial market or in the protection of consumer interests in the financial market.
A person shall be considered to be of good repute in this case if he or she has not been convicted by a court of law of a deliberate criminal offence, an offence against property, an economic offence or an offence committed in connection with the financing of terrorism.
Tip: Criminal integrity means different things in different situations. It will be perceived differently if you are planning to apply for a trade license and differently if you are applying for a position as a financial arbitrator. Read on to find out how it is viewed in each case.
The Financial Arbitrator and his deputy cannot hold a number of other public offices (e.g., he cannot be a Member of Parliament or a judge). They may not engage in self-employment (with exceptions such as property management, artistic or scientific activities).
A financial arbitrator is competent to decide disputes involving:
Disputes arising from the use of payment instruments such as bank accounts, credit cards, online payments, and money transfers.
Example.
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Disputes relating to the issue and use of electronic money, for example on electronic wallets or prepaid cards.
Example: a consumer complains that they have not been correctly credited with electronic money after topping up their prepaid card or e-wallet.
Disputes between consumers and credit providers that may involve loans, mortgages, leases, or credit cards.
Example: a consumer disagrees with the interest calculation on their loan or complains about unclear repayment terms.
Disputes when investing in funds that collect money from the public, such as mutual or investment funds.
Example: an investor disagrees with the amount of fund management fees or has a dispute over improper settlement of an investment.
Disputes regarding life insurance contracts, which may involve the validity of the contract, the amount of the policy or cancellation.
Example: a consumer believes that a life insurance contract has been entered into on the basis of misleading information, or an insurer refuses to pay a claim.
Tip: What to do if the insurance company refuses to pay the insurance claim is discussed in detail in our article.
Disputes when exchanging money between different currencies, both in exchange offices and online.
Example.
Disputes arising in the context of building societies involving savings contracts, building society loans and their terms and conditions.
Example: a dispute over the termination of a building society contract and the amount of money to be paid to the borrower.
Disputes between investors and providers of investment services such as brokers or securities dealers.
Example: an investor claims that a trader incorrectly executed an order to buy or sell securities, resulting in a loss.
Disputes regarding the maintenance of savings accounts, interest rates, fees, and other terms.
Example: a consumer disagrees with the amount of fees charged for maintaining a savings account or complains about improperly credited interest.
Disputes over time deposits that involve payout terms, interest rates, or early withdrawals.
Example: a consumer wants to end a time deposit early, but the bank charges high fees or refuses to pay the deposit.
Action and representation in court
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Disputes about supplementary insurance that includes state support and problems with the payment of contributions or the terms of the contract.
Example: a consumer complains that they have not received the expected amount of state contribution or disagrees with the terms and conditions of withdrawal.
Disputes about pension savings that are not linked to state support but are used to save for old age.
Example: the consumer disagrees with the length of the contract or has a problem with the early termination of the savings.
Disputes relating to a contract for a pan-European personal pension product that allows saving for old age within the EU.
Example: Dispute over early termination of the contract and the terms and conditions of payment of savings.
Dynamic currency exchanges:
Disputes arising from the exchange of currencies with dynamic exchange rates, where the exchange rate may change during the transaction.
Example.
In certain cases, a financial arbitrator cannot make a decision. Therefore, they cannot help you if:
Tip: If you are a business in dispute with another business, then filing a lawsuit may help. But you will only succeed in court if the lawsuit is bulletproof. An available attorney will conduct a careful analysis of the case and take care of preparing a pre-suit notice, a lawsuit, an appeal or straight representation in court where they will vigorously enforce your rights.
If you want to go to the Financial Arbitrator, you must send him or her a request to initiate proceedings. This can be sent by post (preferably by registered post to make sure it has actually arrived), by email with an electronic signature or by using a data box. You can also submit your application in person, on the record, directly to the Financial Arbitrator’s office. The proposal must not include:
Tip: You can also use the official templates, which can be found on the Financial Arbitrator’s website.
Both the application for a proceeding before a financial arbitrator and the proceeding itself are free of charge. Furthermore, you are not required to have legal representation, but it is certainly worthwhile. A lawyer can handle the evidence and the grounds for the application with skill.
If there are any deficiencies in your submission, the financial arbitrator will ask you to remedy them. You have 15 days to do this (which can be extended again at your request). If everything in your proposal is in order, the arbitrator will invite the financial situation you are challenging to comment on the matter and to submit relevant documents (e.g. terms and conditions). This is also subject to a 15-day time limit with the possibility of repeated extensions.
Once the financial arbitrator has obtained all the necessary supporting documents, he or she will invite both parties to the dispute to examine all the supporting documents. This may be done by consulting the file or by requesting the documents collected to be sent to him.
The main objective of the procedure is to reach an amicable settlement of the dispute. The outcome of the proceedings is the award, which will be delivered to you in your own hands. The award shall contain the operative part, the statement of reasons and a statement of objections.
You and the other party may lodge reasoned objections to the award. These are then again decided by the financial arbitrator. Once the objections have been decided, the whole dispute is closed and the decision becomes final. This decision has the same effect as a court decision.
Tip: Similarly, arbitration – an out-of-court method of resolving disputes through independent and impartial arbitrators – works in a similar way. You can learn more about it in our article.
If the arbitrator grants your request, the financial institution must comply with the obligations set out in the award within a specified time limit or as soon as the award becomes final. At the same time, the arbitrator will impose a penalty on the financial institution equivalent to 10% of the total amount the financial institution must pay you. This must always be a minimum of CZK 15 000, even if there is no obligation to pay any amount (e.g. compensation).
The length of the overall procedure depends on the complexity of the case and the cooperation of both parties to the dispute. However, the arbitrator shall decide without undue delay. The fixed period of 90 days then starts as soon as the arbitrator has collected all the necessary documents.
The arbitrator’s decision does not have to be final. You can file a lawsuit against the arbitrator’s decision in a general court. At the same time, you can also ask the court to postpone the entry into force and enforceability of the decision. The parties to the court proceedings will be you and the financial institution with which you have settled the dispute with the arbitrator.
The court may re-examine all the evidence and decide the case itself, replacing the decision of the financial arbitrator. You can appeal against the court’s decision in the traditional way, or you can also appeal.
Tip: Has the court ruled against you and do you want to defend yourself? We will assess your chances of success and take care of preparing an appeal or appeal depending on the proceedings and the stage they are at.
A financial arbitrator brings with it a number of advantages, not only compared to a traditional lawsuit and court proceedings. These advantages include:
A financial arbitrator is a body independent of the courts whose role is to decide on disputes relating to credit, investments, insurance and other financial services. It was set up in 2003 in response to EU requirements to ensure effective out-of-court dispute resolution in the financial market.
Unlike courts, a financial arbitrator can only rule at the request of a consumer and in areas defined by law, which covers a wide range of financial transactions from payment services to investment products.
Need help with filing a lawsuit or representing yourself in court? Whether the litigation is just beginning or the case is well underway, we can help you with everything. We will conduct a thorough analysis, assess your realistic chances and suggest a course of action. All this within 48 hours of ordering our services.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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