How much protection does the new compulsory pecuniary loss liability insurance offer for financial investment intermediaries licensed in future under § 34 f GewO?

 

From the series of newsletters of the DHBW (Baden-Wuerttemberg Cooperative State University) Heidenheim on the topic “Mediation Law in Practice”:
At this point, lawyer Dr. Johannes Fiala, https://www.fiala.de, lecturer for insurance law at the DHBW Heidenheim, will answer your questions.
Questions can be asked by emailing ott@dhbw-heidenheim.de.

 

This field initially contains three areas, namely

(a) open-ended investment funds,

(b) closed-end (KG) funds, and

(c) other financial assets (e.g. profit participation rights, silent partnerships, registered bonds).

An intermediary does not have to apply for a permit for all areas and must then also only apply for the requested

Insure areas. Without prior confirmation of the VSH insurer, no admission will be granted. Does not apply to VSH insurance,

the insurer will notify the registration authority.

 

Failure to obtain new cover from another insurer in good time will result in the withdrawal of the licence.

Already according to the VVG no insurer has to pay in case of intentional breach of duty. The law allows insurers to

in the case of compulsory professional indemnity insurance, also exclude the area of “knowing breach of duty” from cover,

which is also provided for in (almost) every domestic VSH tariff in its AVB.

This refers to the deviation from the mandate given, from laws and other basic regulations for the exercise of the profession.

 

For example, if one of the basic professional duties of the financial intermediary is to advise on products

and to document this advice, only damages to the customer resulting from this conduct or omission should not be insured.

 

VSH compulsory cover therefore does not mean comprehensive protection. More details on this, as well as on other “coverage gaps in the

Vermögenschadenhaftpflicht”, can be found in the book of the same name published by C.H.Beck.

As a rule, however, it will be the case that, in addition to “knowing breaches of duty”, other consultancy errors are also present, for which then a

VSH coverage will nevertheless exist in the same case.

 

Until now, many VSH cover policies have stipulated that there is no VSH cover without advice and/or documentation.

If an insurer were to continue to provide this in a mandatory VSH coverage, it could be invalid because under law or

According to case law, an intermediary (as opposed to an advisor) only owes the investor information (and precisely no advice).

 

It should be just as ineffective if “legal and tax advice” is completely excluded from VSH coverage in the insurance broker VSH, because insofar as it is simple legal advice as an “ancillary service” in the sense of the RDG, this is completely legal and must therefore also be covered by the VSH compulsory insurance.

 

If the VSH does not cover a gross professional or deliberate error, and the private assets of the financial investment intermediary do not provide any compensation, the customer is effectively left to bear the loss – he then bears the insolvency risk of the financial investment intermediary.

 

The VSH compulsory insurance can therefore not really be called comprehensive consumer protection.

 

Published in

http://www.dhbw-heidenheim.de

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
PhD, MBA, MM

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.)