Real standardized certification or marketing gag?
Time and again, “rating agencies and monitoring associations” are pilloried because studies criticise their work. Rightly so, the authors argue, putting most of these “awards” on the same level as carnival decorations and medals of honor. Red.
If, apart from strictly regulated genuine certificates (based on DIN-EN-ISO standards, for example), no more awards, assessments or testimonials were allowed, free speech would have to be banned altogether, and any quotation from it too. Otherwise – as Reinhard Mai says – “you don’t need plumbers anymore, then I’ll just become a plumber”.
Reputable accredited providers, however, are in competition with the so-called unregulated sector. The latter is not forbidden to work just as seriously, but it is also allowed to distribute “carnival medals for financial houses and their employees” with non-transparent award criteria.
Environmental certification is now also in demand among the Sicilian Mafia: orders are being completed in a CO2-neutral manner. People only shoot unleaded and drive on biodiesel. Bodies are disposed of in the fireplace using renewable raw materials – wood from the company’s own forest. The legislature has not created a special certification rule for this either.
Self-responsibility of customers counts
Clients of financial institutions know that the vast majority of advisors are not “in their camp” – and yet most of them do not monitor products and product providers effectively. Not infrequently, this business model of blind trust ends in the shameless realization of error or (self-)deception. But should the legislator insist on having a certain certificate in addition to the prescribed product information?
A prohibition on giving the customer such “information” that the legislator does not consider useful is also unlikely to achieve its objective. Perhaps the investor is interested in the seal on the share certificate, which promises at least the harmless compostability of the same after the money has been destroyed? Legislators would have to establish a censorship board to approve useful information to stem useless, burdensome information overload!
Misleading advertising in case law
Example “European Economic Chamber”:
The OLG Dresden (judgement of 29 February 2000, Ref.: 15 U 3716/99) prohibited advertising with awards (i.e. certificates) if these are not “based on recognised and published quality conditions”. So if a certificate is based on creatively self-created rules, it is illegal, as it is anti-competitive, if the person so certified advertises with it without restriction – and, by the way, then mostly punishable under competition law (UWG). Users should inform themselves about risks and side effects.
Example TüV seal “GS – Geprüfte Sicherheit” (GS – Tested Safety): The Regional Court of Munich ruled in its judgement of 19 November 2007 (Ref.: 14 HK O 7323/07) that when a “certificate” is issued, the issuer is liable if this is legally inadmissible and damage is caused as a result. Example “Certified Executor”: The Lower Saxony Lawyers’ Court ruled in its decision of 12 January 2009 (Ref.: AGH 23/08) that the use of the designation “Certified Executor (AGT)” is misleading and thus inadmissible. A private association had “freely invented” this certificate.
The advertising with this “invention” was censured because it suggested an official award, which in reality does not exist. Example “Dekra-certified lawyer”: The Regional Court of Cologne (judgement of 26 November 2009, ref.: 33 O 353/08) and the Regional Court of Berlin (judgement of 19 November 2009, ref.: 16 O 479/09) similarly condemned the advertising of Dekra-certified lawyers with their Dekra certificate.
Task for customers of the financial houses
Certificates and seals for the desired “harmlessness” of products or advice are never a sufficient basis for decision-making. This would be just as much a pipe dream as, for example, the opinion of many an intermediary: “Surely I can always offer a product of a life insurance company supervised by the supervisory authority without any concerns!”
In the event of damage, experience shows that it costs 20 times as much or more if the customer foregoes prior inspection by independent experts. Because politics will never manage to simply abolish everyday financial fraud or the brokering of products that are unsuitable for the customer. Certificates – no matter how regulated – are not even capable of doing this, even if the customer mistakenly thinks they are.
Ignore incomprehensible certificates
The TüV seal on the car in no way ensures that a completely unsuitable driver buys a Ferrari in the car dealership after “advice”, which he then rams completely out of his depth against the next bridge pillar. Nor does it protect the owner from replacing the worn summer tyres with borrowed ones just for the TüV visit – and then days later drunkenly sweeping the next pedestrian off the road at the zebra crossing at a speed of 90.
And the tourist asked himself, tongue hanging out in the face of the already waiting vultures, what good is the TüV seal if you break down on a remote gravel road in Death Valley with shredded tires. In all cases, even the most sophisticated and highly regulated TüV seal would probably not have been of any use – in the end, the customer has to take care of his own affairs – and perhaps he can then still blame an advisor.
Certificates can be misused
Hardly any customer is really interested in what a seal or certificate of a distributor, provider or consultant actually means for him. He often thinks that he can now buy the product sight unseen because nothing can go wrong. It is precisely this kind of attitude that the certification industry thrives on – it makes sales easier when the customer stops asking.
And because there is a demand from distributors and product suppliers for seals and certificates, there will always be companies offering such certificates. As far as there are no legal regulations for this, one should calmly allow every certifier to do this – the market, competition law, consumer education and consumer acceptance will then ensure that the best certifiers prevail after many attempts.
Then one day consumers might have more – but never unconditional – confidence in these certificates. Any state regulation would hinder this development at an early stage and still not ensure the quality of advice. The then inevitable emergence of new forms of sought-after seals, confirmations or certificates and whatever else may be called unregulated cannot be stopped anyway.
by Dr. Johannes Fiala and Dipl.Math. Peter A. Schramm
by courtesy of
www.kreditwesen.de (published in Vermögen und Steuern, issue 04/2010, page 29)
under the heading: Financial advertising – legal, illegal? Certificates, seals of approval, awards, “verified” awards?)
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About the author
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.
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