The new alternative dispute resolution (ADR) law poses a risk of fines for financial intermediaries up to 10% of turnover.
Law No. 130 was passed on 06 August 2015 (the ADR Law) and came into force with effect from 03 September 2015. It implemented in Italy EU Directive 2013/11/UE on ADR, with the aim of facilitating for consumers access to, and use of, ADR procedures in Italy as well as for the purpose of ensuring the transparency and efficiency of such procedures to the fullest extent possible.
Under the new provisions, every ADR chamber must establish its own website where the following information, inter alia, has to be provided to consumers:
- how the ADR procedure works
- the relevant procedural rules
- whether the dispute will be resolved by application of legal principles or on the basis of equity
- how to submit the claim, including submission via e-mail or via the relevant ADR chamber’s website
- the option to mediate and/or resolve cross border disputes under EU Regulation 524/2013
- the languages accepted in which to present a claim and to conduct proceedings
- the names and expertise of the mediators • the costs and fees to be incurred by the parties, and
- the duration of the procedure.
Pursuant to the ADR Law every financial intermediary and/or any other entity or person subject to Italian Companies and Stock Exchange Commission's (CONSOB’s) supervisory activity which will be shortly identified by CONSOB (the Supervised Subjects) must adhere to ADR procedures established for reaching out-of-court settlement with retail investors (the CONSOB ADR Procedure).
A dedicated CONSOB regulation will be issued shortly (the CONSOB ADR Regulation) for the purpose of, inter alia identifying the Supervised Subjects who must adhere to the CONSOB ADR procedure and the relevant procedural rules. Funds, asset management companies, investment companies, distributors and promoters are likely to be included among the Supervised Subjects which will have to comply with the above rules.
In order to comply with the ADR Law provisions - Supervised Subjects should amend their relevant contractual documentation (eg portfolio management agreements, prospectuses and information memoranda, etc) for transactions to be entered into with retail investors, so that accurate information is provided to investors about the existence of the CONSOB ADR Procedure. This should include information about the investor’s right to refer any claim or dispute arising out of the relevant transaction to the CONSOB ADR Procedure, as well as any other information as required by the forthcoming CONSOB ADR Regulation.
It should be borne in mind that failure by Supervised Subjects to adhere to the CONSOB ADR Procedure will result (pursuant to Article 190 and 190-ter of the Financial Act) in their being exposed to a fine ranging from EUR 30,000 up to 10% of their relevant turnover in cases where the Supervised Subject is a company or legal entity and to a fine ranging from EUR 5,000 to EUR 5m where the Supervised Subject is a financial consultant pursuant to Article 18-ter of the Financial Act.
Supervised Subjects should be ready to act quickly, by implementing all relevant internal procedures, as well as by starting to review their contractual documents now and by thinking about the most appropriate wording to ensure that the required amendments are in place when the CONSOB ADR Regulation comes into force