When most people hear the words “surf days” they think of sun, sand and metre-high waves. But for BaFin staff the term is an important supervisory tool in an era of increasing digitalisation. Supervisors visit selected companies’ websites to gain an overview of how specific supervisory issues are handled.

BaFin’s Consumer Protection Directorate (VBS) looked at banks’ and insurers’ websites on two surf days in 2021. The goal was to check whether the companies were complying with their duty to provide information on alternative dispute resolution mechanisms under section 36 of the German Act on Alternative Dispute Resolution in Consumer Matters (Verbraucherstreitbeilegungsgesetz – VSBG) to the extent necessary. The Directorate found that most companies were already compliant: only in a few cases did the supervisors have to require changes.

The background to the surf days was a ruling by Germany’s Federal Court of Justice (Bundesgerichtshof – BGH) on the VSBG dated 22 September 2020 (case ref.: XI ZR 162/19). This specified that companies have to inform consumers about alternative dispute resolutions mechanisms both on their website and in their general terms and conditions of business. “Alternative dispute resolution mechanisms” are defined as conflict resolution methods that can be pursued instead of court cases (see info box).

A broad-based sample

BaFin selected 50 credit institutions and 30 insurance undertakings for its investigations. The institutions included savings banks, cooperative banks and private banks of different sizes and from different regions. The insurers comprised 10 life insurers, 10 health insurers and 10 property/casualty insurers. The goal was to have as representative a sample as possible.

Banks: most results were satisfactory

The banking surf day revealed that 40 out of the 50 institutions complied with their duties to provide information in full. The references to alternative dispute resolution mechanisms provided both on their websites and in the terms and conditions that are accessible there complied with the statutory requirements. However, BaFin discovered that four institutions had what were in part material defects. Either the websites provided no information at all on out-of-court dispute resolution mechanisms or the information given was imprecise. For example, foreign dispute resolution entities that do not actually have jurisdiction were mentioned or institutions that have not been approved for alternative dispute resolution, such as the European Central Bank, were listed.

Insurers: most undertakings provide information

The surf day for the insurance sector revealed that all undertakings with an Internet presence that were investigated had published the necessary reference to out-of-court dispute resolution mechanisms on their websites. In addition, BaFin checked whether the insurers, like the banks, had added an appropriate reference in the general policy conditions that are accessible via their websites. A total of 15 undertakings published their current general policy conditions directly on their websites – something they are not actually obliged to do. However, only six of these general policy conditions contained all necessary information on alternative dispute resolution, whereas nine insurance undertakings did not provide the information for some tariffs at least.

Defects are being remedied

The banks and insurers for which BaFin discovered defects during its surf days have all reacted and have rectified, or promised to rectify, the errors in their general terms and conditions or their general policy conditions.