Law No. 229/2002 Coll., on Financial Arbiter, adopted on 9 May 2002 and applicable from 1 January 2003, responded to the requirement to harmonise Czech legal order with the law of the European Union linked to the preparations for the EU accession. European Directive on Trans-Border Transfers requires, that the member countries establish proper and effective procedures for solution of the complaints and disputes in the sphere of fund transfer and electronic payment instruments, because a classical court protection in many cases has not sufficient efficacy, process is lengthy and costs of a lawsuit often exceed the disputed amount.
Law on Financial Arbiter is applicable on dispute settlement among transfer providing institutions (mostly banks) and their clients, if the transfer amount does not exceed 50 thousand EURO, on dispute settlement among institutions, issuing electronic payment instruments (cards) and holders of these instruments during their issuance and use.
Following principles apply in the financial arbiter proceedings:
- proceedings are opened at the request of the client of the transfer institution or at the request of the holder of electronic payment instruments
- the proceedings are without charge for the client and easily accessible
arbiter gives assistance to the clients-claimants in filing the request and informs the respective supervisors on his findings about the shortcomings in the activities of the institutions concerned.
The Directive requests the right for the client to conduct the proceedings of the arbiter in the language that was used in the contact between the client and the bank.
Institutions are by law obliged to extend necessary co-operation to the arbiter and if they fail to do so, they may be penalised up to 1 million CZK. Further penalties, that may be imposed on the institutions for the violation of the rules, established by the Law on Fund Transfer, may reach 10 per cent of the disputed amount.
The activities of the arbiter have to be conducted transparently, which – inter alia – results into his obligation to prepare and release annually an Activity Report including a description of the selected disputes.
Arbiter and his Deputy are elected by the House of Deputies of the Parliament of the Czech Republic for a five year term from the candidates nominated by the Czech National Bank, banks and consumer protection associations. Costs of the administrative support and salaries of the Arbiter office bears Czech National Bank.
For more information see, please, the official web site of the Financial Arbiter.