The Italian Alternative Dispute Resolution (ADR) mechanism and customer behaviour

Encouraging and fostering the creation of Adrs is becoming one of the priorities for national and international regulators. The cost of traditional judiciary systems is indeed generally too high to ensure adequate access to justice for consumers. As a matter of fact, the level of minimum cost sets a threshold which, eventually save for collective actions, prevents most consumer complaints to find access in court. Since this fact is certainly true, in case of financial contracts, the European Union has approved appropriate regulations forcing Member States to create Adrs which are competent for settling banking and investments complaints. The opportunity for the consumer to access justice represents not only the answer to a request for fairness of treatment and equality, but it is also essential for a proper functioning of the market and for efficiency. If unfair suppliers were shielded by the judiciary sanctions due to the costs to access traditional judgment, they would easily opportunistically gain profit from transactions benefitting from the appropriate behavior of more convenient suppliers and this way, distorting market conditions at the detriment of both consumers and competitors. There are then strong motivations to reduce the cost of accessing justice and they are significant for all stakeholders. However, whereas an excessive cost of justice encourages opportunistic behaviors from the part of suppliers, setting the cost at an excessively low level also provides incentives for equal opportunistic behaviours and damages consumers as well as suppliers, hampering the market’s efficiency. In the paper the behaviours of consumers appealing to Abf are examined,trying to understand if a prevailing examination of this body upon specific issues has the effect of “attracting” complaints on those matters; the fact that decisions on certain subjects are mostly favorable to appellants encourages consumers to take actions since the minimum cost of appealing, as a matter of fact, does not represent a disincentive for unmotivated claims and for a reckless approach to appealing. Should this situation prove to be true, negative impacts would affect not only the financial industry but also consumers and the Abf system’s efficiency; whereas financial institutions would surely re-price their products taking into account the risk of being frequently and significantly condemned to pay indemnities to appellants, the capacity of the Adr system to address issues which actually require attention and decision is weakened by the volume of standard and recurring matters that would be submitted to the decision. The first evidence of the analysis shows that for a considerable amount of products (namely Atm/Pos and night safe, Loans secured by a pledge of salary, Credit accounts, Consumer credit and Mortgages) there is indeed said “attraction” effect; this fact has an impact on the system’s efficiency, on the overall costs, but also on the behaviours of the consumers, providers and lenders as an ex-post redefinition is most likely to occur. What is also worth pointing out is that what we called “attraction” effect is almost immediate as it occurs in a two-year span; since the Abf decisions are public but not widely popular and well known, it is difficult to understand how such a large number of consumers becomes aware in such a short time of decisions of a certain relevance, but to some extent strictly technical, and accordingly react promptly. The reasonable explanation, which is confirmed by an empirical observation, though not yet proved by specific data, is that “facilitators” play a significant role in seeking potential appellants who are encouraged to submit a complaint to the Abf. This activity would not be, for itself, negative and to some extent could accelerate the effect of market discipline which is one of the aims of the Abf. The problem is that the so-called “facilitators” are acting for profit, gaining interest not only from lenders but also from consumers and that their misdeeds contaminate and distort the Abf’s activity forcing it to work on serial complaints and undermining its original role of a free access judicial service. The fact that the Abf’s activity can be easily and significantly driven to focus on certain issues shows that it is vulnerable and subject to abuse; this is clearly harmful not only for the financial industry, but mainly for the market and for consumers which are deprived of the easy and convenient access to Adrs