The activity of the Arbitrator for Financial Disputes (AFD), the out-of-court dispute resolution body between savers and financial intermediaries, established by Consob in 2016 and operational since January 2017, continues to grow.
The first half of the year was marked by the arrival of 903 new appeals (874 in the corresponding period of 2020). Over 8,000 appeals have been received in total by the Consob Arbitrator from the beginning of his activity to date.
The Board admitted 65 per cent of the appeals examined (35 per cent have been rejected), awarding compensation for a total of 13.5 million Euros (12 million Euros in the first half of 2020). Taking also into account the decisions made in the previous four years, in mid-2021 the total amount paid to savers almost reached 100 million Euros (totalizing 97.8 million Euros), with a per capita average of around 40,000 Euros.
The total value of savers' compensation claims in the first half of the current year is almost 47 million Euros (about 50 million Euros in the first half of 2020), with an average unit value of 50,000 Euros; over 200 appeals related to requests for compensation for amounts exceeding 50,000 Euros, up to the expected maximum of 500,000 Euros. In mid-2021, the total claims for compensation made to the AFD thus exceeded 450 million Euros.
The South of Italy was confirmed, even in the first half of 2021, as the source area for the largest number of appeals (41 per cent), slightly ahead of the North (40 per cent) and, far behind, the Center of the country (19 per cent).
Against the 903 appeals received, 918 proceedings were concluded in the first half of 2021, with an increase of more than 20 per cent if compared to the same figure for 2020 (750). The meetings held by the Board also increased accordingly (35 in the first half of 2021, 27 in the same period of 2020). A further, decisive increase in the investigation and decision-making activity is scheduled for the second half of the year, in line with the declared objective of bringing the deadline for the conclusion of proceedings back to the standard time of 180 days by next year.
The measures for early termination of the proceedings undertaken by the President, at the request of the applicants concerned (152 in the first half of 2021, 107 in the same period of 2020) are significantly increasing (+ 50 per cent ). This is a trend to be assessed positively, as it is mostly related to cases in which the parties have independently reached an amicable settlement of the dispute, which proved to be an effectively feasible solution only after the investor initiated the proceedings before the Arbitrator.
On the other hand, there is an appreciable decrease in the frequency of cases of inadmissibility / inadmissibility of appeals for formal irregularities found and not remediable: 113 in the first part of the current year, while there were 242 during the whole of 2020 and 290 in 2019.
The intermediaries so far involved in the proceedings before the Arbitrator are 195, of which 71 in the first half of this year; overall, 1,177 intermediaries adhering to the AFD system as at 30 June last.
The area with the greatest critical issues in relations between retail investors and intermediaries continues to relate to the preliminary information for the investment. Too often, savers who turn to the AFD, in addition to not recognizing themselves in their investor profile as outlined in the specific MiFid questionnaire, complain that they have not received clear and adequate information on which to base informed investment choices.
This is a problem that the AFD College is almost systematically facing and on which numerous and consolidated guidelines of a general nature have now been defined in the almost 4,000 decisions published so far; they are freely available on the institutional AFD website (https://www.acf.consob.it/). Guidelines that intermediaries should comply with, adjusting their operating practices accordingly, so as to sterilize in the bud or, at least, minimize the cases of subsequent litigation.
Precisely as a function of this and as a contribution to the better usability of the guidelines, from the current month of July, a review of "maxims" taken from the decisions made by the Board and considered of greatest interest to intermediaries as well to savers, will be published on the site.
For retail investors, the publication, in the second half of the year, of a practical guide is also planned which, drawing inspiration from the cases that are gradually examined, identifies the good and bad practices found. The goal is to generate information and behavioural awareness in small savers, who too often rely indiscriminately and tend to lose responsibility, only to regret the outcome of the investments made.
Finally, it should be remembered that the amendments to the AFD regulation, recently approved by Consob at the end of the public consultation conducted last year, will come into force from 1st October next. Among the important innovations, the provisions aimed at further facilitating the amicable and direct settlement of the dispute between the parties and the fulfilment of the decisions by the unsuccessful intermediaries (such as the possibility for the parties to obtain the suspension of the arbitration proceedings in case of the start of negotiations to find an agreement; the postponement of the publication of the notice of non-fulfilment if the parties start a negotiation aimed at reaching an agreement on the basis of the AFD decision; the possibility of late fulfilment, with cancellation in this case of the notice of non-compliance), in addition to the expected standardization of the new procedural forms, which will be made available on the AFD website by next September.