Generation consultants, succession planners and financial planners together with initiators in conflict with the Legal Services Act

For decades there has been the training as Financial-Planner (financial planner), Estate-Planner (succession planner) and for some years now as Generation Consultant with IHK certificate. Surely only the trainers will make money from this for the time being. At second glance, it is a guide to the violation of the Legal Services Act (RDG) and the Tax Consultancy Act (StBerG). RDG and StBerG are prohibition laws with brutal consequences for the consultant. Johannes Fiala and Peter A. Schramm, attorney at law and actuary, explain how legal services and financial services can be combined nevertheless.


Violation of prohibition law – customers do not owe a fee, liability is nevertheless accepted


According to § 134 of the German Civil Code, consulting contracts with persons or companies without a license under the Tax Consulting Act (StBerG) or the Legal Services Act (RDG) are “null and void”. Examples include an insurance broker from the East who specialises in the “draft of pension schemes for dentists” in occupational pension schemes (bAV) – or another from the South who handles benefit cases in the event of occupational disability (BU). The type of remuneration, for example a (success) fee, is irrelevant. A financial loss liability insurance is useless, because it will not pay.

In the BaFin journal on 15.02.2017 the Financial Supervisory Authority (BaFin) pointed out to the insurers (VR) that it is (also) their responsibility under §§ 29 II, 294 II, III, 62 I 1 of the Insurance Supervision Act (VAG) to have this work carried out by their agents, if necessary, because of numerous risks in the person of “damage-regulating brokers” (e.g. no VSH cover for such work). This concerns domestic and foreign insurers. Some special cover concepts of brokers for certain industries and professional associations are thus history (BGH, judgement of 14.01.2016, Az. I ZR 107/14).


BaFin takes insurers to task – brokers are subject to different supervision


The Federal Court of Justice (I ZR 107/14) criticised that legal services provided by brokers for VR (here: claims settlement) are out of the question as an “ancillary service” within the meaning of the Legal Services Act, if only because there was no main service in the non-legal field, as required by paragraphs 5, 6 RDG. The ancillary service should also have been subordinate and necessary (in relation to the main service). In addition, there were conflicts of interest vis-à-vis the insurer and policyholder (UN). According to BaFin, any activities for BoDs that require legal knowledge, such as claims settlement, are thus no longer possible, in addition to claims processing in the sense of processing the insured event, as are risk assessment, acceptance of applications and portfolio management.

Legal questions constantly arise in inventory management, such as whether someone is in default. The same applies to risk assessment and acceptance of the application, because a decision must be made as to whether, for example, the life insurance contract can be concluded in this way, or whether it can still be revoked after more than a decade due to lack of approval by the guardianship court, or whether it is even ineffective because the insured person has not given his or her consent in a sufficient form. The same applies to the question of whether the health information must be inquired about more precisely or whether this can be postponed until the examination in the case of a benefit claim. The latter also clearly shows the conflict of interest in the conclusion or non-execution of the contract.

Insurance law services only for policyholders are permissible within the framework of the brokerage, and thereafter in the cases specified in § 34d GewO. According to the administrator’s judgement, this includes, for example, risk assessment and property inspection; in addition, according to §§ 60 ff. VVG the consultation with documentation.

For example, the “agreement, amendment or review of insurance contracts” (§ 34 d I 4 GewO) does not cover the settlement of claims for the UN if more than the simplest legal questions arise.

Another reason for the prohibition of brokerage services for insurers was the conflict of interests under Section 4 RDG. Whether it would be sufficient to avoid the collision by telling the UN that one is acting as a broker (also) for the insurer – i.e. on the opposite side – was left open by the Federal Court of Justice. The broker is therefore also threatened by the loss of brokerage fees as a double broker, § 654 BGB. Furthermore, such outsourcing by the insurer can result in a loss of tax exemption for the broker – something that a tax investigator might be very interested in. If up to 10 years of retroactively evaded value added tax is to be paid retroactively, this means the destruction of the company’s existence.

The BaFin makes the BoD responsible, and the BoD makes the broker responsible – through supervision and control. This means that BaFin will not become the supervisory authority for brokers. This shows how BaFin, through its insurance supervision, holds insurers to account and also influences their cooperation with brokers. This will prove to be far more effective than supervision of brokers could ever be, bringing brokers under the control of the BoD. A leash and muzzle compulsion, which is directed only at dogs without making their owners responsible, would also be of little use.

Federal Court of Justice (BGH) orders generational advisors to repay remuneration


The BGH (ruling of 11 January 2017, Ref. IV ZR 340/13) sanctions promising services that (also) include legal pension advice as null and void according to § 134 BGGB. No fee is then owed. A reclaim of the remuneration paid shall only become statute-barred after 10 years (absolute). Until then, however, not only the remuneration can be reclaimed. In addition, the customer will also file a declaratory action for a declaratory judgement that the consultant is also liable beyond the 10 years for unknown and/or still occurring damages, whereby the proof of further fault is then no longer relevant. The Higher Regional Court of Karlsruhe (OLG, judgement of 23.12.2010, case no. 4 U 109/10) had already made the same judgement with the financial planner using the example of the establishment of precautionary powers of attorney, the calculation of inheritance tax and the planning of anticipated succession.

Not only chambers of the legal profession, but also tax advisors successfully warn against this – even at the bank or board of directors. However, a “mere writing aid” would be permitted, for example, if one obtained a sample rental agreement from a stationery dealer and helped to fill it out like a secretary – without advice on the content under “Miscellaneous: …”. In the case of the real estate agent, on the other hand, it would be permitted as an ancillary service to the brokerage activity – also with full liability for the content.


Prohibited collection of data for disclosure to tax consultants (StB) or lawyers (RA)

The OLG Düsseldorf (judgement of 15.06.2010, file no. 20 U 175/09) already stated: “If someone appears outwardly recognizable as an agent for another person, it is always the case that a foreign legal matter has been procured”. This is not only the case if the expert writes a letter of defence concerning the duty of safety on ski slopes, but also if the BU claims settlement broker acts on behalf of the client or prepares draft letters for the client. The recommendation of such service providers may then also lead to joint liability, inter alia for aiding and abetting.

Up to more than thousands of customers have been taken in by providers who bought life insurance policies in return for a profit-sharing bonus from the customer, which led to the policy being voided. The BGH (ruling of 12.11.2015, Az. I ZR 211/14) showed the initiators the way to legality – by acquiring a collection permit, § 10 RDG. The BGH then wrote to a badly advised initiator in another place in the register of companies that the later admission of collection was not sufficient to repair the nullity.


Invalid contract with lawyer and tax advisor?


If a “generational advice institution” then calls in a StB or RA – even if the actual order, i.e. the mandate was issued by the customer – communication in this respect with the “initiator” or “financial service provider” authorised by the customer will also lead to the invalidity of the RA/StB mandate. The involvement of an RA/StB through a generational advisor, occupational pension expert, financial planner, succession planner, etc. (the RA/StB could also be a “cooperation partner” and thus burden himself or herself with the Internet presence) for the customer, including the prior collection of data or documents for this purpose, thus leads to the “double nullity” of the contracts. The service contract with the financial service provider, the associated power of attorney, as well as all StB/RA cooperation arranged by the financial service provider as an authorised representative are null and void. This also applies if the StB/RA is an employee of the financial service provider or occupational pension consultant.

The safest way for the financial service provider is to leave it up to the customer to choose “his” StB/RA and, above all, to let the customer take the initiative for the first contact in each individual case: Afterwards in arrangement with StB/RA and customer then documents and contracts to arrange, are always permitted secretariat services, which can be remunerated in the meantime some Finanzdienstleister also separately. Sometimes you help the customer to describe his case, i.e. you read the letter and search for evidence on the Internet, for example: “Oh, you were a customer of this Berlin insurance company until it went bankrupt – and now you can only file a claim with the bankruptcy trustee; I will help you with your research”.


Is the “pilot function” of the financial service provider proving to be a waste of time?


Practical experience shows that well-trained financial service providers do indeed recognise the “need for advice with regard to testamentary dispositions, powers of attorney, gift agreements, marriage contracts, partnership agreements, adoption applications, wills for the disabled, etc.”. The training advertisement is inapplicable: “Points of contact for generational counselling are the financial, legal and fiscal “predetermined breaking points” resulting from different family constellations”. Because predetermined breaking point means that even free legal and tax advice already leads to total nullity in case of doubt, §§ 134, 139 BGB. The “pilot” authorized by the customer digs his own grave with it.

The BGH writes in the reasons for the judgement: “In the case of “financial restructuring”, in which a company recommended a “lawyer experienced in debt matters” and bore the costs of this lawyer, there was a violation of § 3 RDG, because this lawyer was in substance a vicarious agent of the company, even if he was “formally commissioned and authorised by the customer himself” (BGH, judgement of 29.07.2009, Az. I ZR 166/06).

As an alternative, it would be permissible and advisable to be employed by such clients – with payroll accounting and all the rest; possibly via a mini-job or as an interim manager for the financial and technical organisation of generational succession. This then leads out of the regulation of necessary professional licences as a self-employed person to the “pilot profession”: This often results in a variety of activities, such as the compilation of documents with the suspicion of legal claims (incorrect insurance settlements, incorrect advice also with regard to investments and pension schemes, ineffective premium adjustments, void cost equalisation agreements with brokers, cases of revocation in life and property insurance, incorrect coverage amounts including under-insurance, credit assessment), including any operational area of the customer. The trade in diamonds or used life insurance policies – also as a self-employed person in this field – would be just as free of licensing.

On the other hand, the independent pilot function, for example, advertised and carried out according to the words “We will secure for you organisationally and legally what is possible and sensible in your interest”, would be prohibited. Even an IHK certificate does not prevent the application of § 134 BGB.


No loss of cover in the Vermögenschadenhaftlicht (VSH) – because there is no cover!


The examination of professional liability is carried out in three steps: Insured profession, insured activities, and exclusions. In the case of financial service providers, the exclusions regularly include “legal and tax advice”, which each affected party can read about in their own terms and conditions. The fact that this exclusion is too comprehensive according to the wording, because there are also (absolutely) necessary and thus insofar permitted ancillary services for the profession of financial service provider according to the RDG and StBerG, opens up a need for discussion with the VSH broker. Because this is an open door to be able to sue the board of directors for its VSH cover on the grounds of a surprising clause. Not covered in some VSH is also the mediation of cooperative shares, or of “real estate funds” which may in reality have been something else.

Do financial planners, succession planners and generational consultants with completed training regularly learn something about the RDG – and then know what they are allowed to do and what they cannot do? If, contrary to the RDG, the “pilot function” was taught incorrectly during training, liability for deliberate immoral damage by the trainer would come into question, § 826 BGB.


Bad advice is expensive – and sometimes leads to jail


Bad advice was given to initiators who were first visited by the LKA or the Criminal Investigation Department together with the Public Prosecutor – after which a BaFin liquidator or the insolvency administrator took over. The initiator had been advised by a “renowned” legal advisor, he believed, until BaFin contacted him with reference to the fact that the business model would have required prior BaFin approval. Criminal proceedings are also regularly instituted against the cooperating intermediaries – so the approval is as good as gone. It was “only” about the purchase of LV or other products. Similarly unpleasant questions arise in the case of the sale of foreign cover, not only in private insurance, by a BoD without the necessary permission or notification of the sale in Germany to BaFin.


New concepts – only with endurance, war chest and good advice


They exist, the more liberal countries, without the need for a licence for certain financial services or tax advice. For example, a tax consultant based in Holland was granted the right by the European Court of Justice (ECJ) to advise cross-border clients in Germany – a (partial) abolition of the StB privilege (ECJ, ruling of 17.12.2015, ref. C-342/14). An alternative option, not only for cross-border financial service providers?


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of (published on 21.02.2017)



Our office in Munich

You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.

About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
»More about Dr. Johannes Fiala

On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.

Arrange your personal appointment with us.

Make an appointment / call back service

You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.

Obtain a second legal opinion

(The first phone call is a free get-to-know-you conversation; without consulting. You will learn what we can do for you & what we need from you in terms of information, documents for a qualified consultation.)