Legal and tax advice to banks. Germany and Switzerland in comparison

(! ISSUE 06/06 December/January, p. 20 ff.)
From a bank client’s point of view, it is a relief to be able to obtain the desired services from a single source, so to speak. In Switzerland, lawyers and tax advisors also sit at the bank’s premises to recommend the right arrangements to the client. In Germany, the banks have always had a problem with this ? but now other times are to dawn for the bank customers and the credit institutions. The strategists of the German banks have by no means exhausted all the options that have existed so far.
The situation in Switzerland
In Switzerland, as in many EU countries, anyone can provide extrajudicial legal services. This also leaves it open to the banks to offer attractive ? possibly cross-subsidized ? Remuneration to offer legal or tax advice to the client. There is open discussion about genuine tax saving schemes, relocation of residence and legal opportunities at home and abroad. Do you want to transfer a large part of your assets to your non-marital partner tax-free? No problem, the tax expert of some Swiss banks can show you the way and at the same time make the necessary connections.
The situation in Germany
In private banking, the client is sold financial planning. The financial planner uncovers considerable deficits of the tax advisor. A short time later, a credit institution in southern Germany signs a cease-and-desist declaration at the request of the local chamber of tax advisors. The dream of holistic advice from a single source is over. Several banks realized through liability cases that they had “richly calculated” the client in financial planning ? instead of advising carefully and mapping out different scenarios, including an “exit strategy”. The client turns away from his private banker, even if he visits him on the tennis court or golf course ? because some financial planner training is incomplete. Above all, there is a lack of basic knowledge in the insurance sector, so that some inheritance or financial planning, when critically examined, turns out to be literally built on sand.
Pure financial planning?
The very good financial planners outperform both the lawyer and the accountant. This is when major gaps in the training of honorary practitioners become apparent to practitioners, which occasionally find themselves as liability cases in the superior courts. Financial planners possess economic understanding and knowledge of financial products. The German legislator, however, blocked the way for these experts to break through with its Legal Advice Act of 1935: Without reference to the product sale or a product brokerage, no tax or legal structuring advice may be given (as an auxiliary business).
Low-level legal advice?
This means that German banks can only provide ?brief advice? on basic principles and generalities. Before the individual case consultation and concrete conversion the banker must quit however. The credit economy stands thereby on lost post, because it is strictly forbidden its employed lawyers with lawyer admission to advise the bank customers comprehensively legally ? sometimes it happens nevertheless. The consulting contracts with the bank are then regularly void ? a fee is therefore not owed by the customer.
Support from the Parliament
At the request of the business community, this is now to change; in future, a reform of the law is to eliminate precisely this point. It is to be up to the commercial bank, as in Switzerland and other EU countries, to ensure that wills, for example, are drawn up in such a way that the assets remain within the bank. Today’s ?specialist lawyer for inheritance law? will in future probably find himself employed by the bank, as has been a reality in Switzerland for many years. Tax and legal advice are to be part of the range of services. From a German point of view, this means that today’s specialist lawyer is in collision, as he has to advise the client ?independently? but at the same time also serves his employer, who also has massive financial interests of his own at stake.
Bank lawyers on the chain
The professional code of conduct prohibits employed bank lawyers from participating in the sale of financial products on a commission basis ? the license will be at stake. A similar case of conflict may exist if the bank lawyer, on the one hand, acts commercially, i.e. as a banker, and, on the other hand, provides legal services in the core area of the lawyer’s profession. Inheritance and financial planners working in private banking who are not admitted to the bar are not subject to these barriers. At present, the credit institution must still strictly ensure that the tax and legal advice remains within the scope of an ancillary business, which does not mean a licence for comprehensive advice in the tax or legal field.
Best possible advice through cooperation
Therefore, one solution to the bank’s strategy is to work with honorary professionals who are genuinely independent and not employed by the bank. The Federal Court of Justice even expressly permitted advertising with a commercial/freelance cooperation in July 2005. German credit institutions like to use lists of lawyers’ associations instead: Only a few lawyers on such association lists are even proficient in inheritance and financial planning, which often makes sense. For the client, going to the banker in Switzerland offers better integration of planning and implementation ? customer benefit and satisfaction deepen the basis of trust.
Problem solving through online consulting?
The e-commerce EC Directive 2000/31/EC already introduced the country of origin principle for online legal advice. Internationally positioned credit institutions thus have the opportunity to obtain their own legal advice from employees abroad. A commercial legal adviser from the Netherlands expects a positive confirmation from the Federal Court of Justice this year regarding online legal advice across the border to Germany.
Private Wealth Management
A further approach for more room for manoeuvre in the legal field follows from the case law of the higher courts. There, the change in the reality of life is targeted. Shaping this positively for the benefit of the customer is a task for the boards and associations of the banking industry. Again, a look at Switzerland helps ? there is the famous Swiss Banking School and a university course in wealth management. Joint training for both sides of a cooperation with honorary professionals can increase the understanding about family office services for the client.
Transparent international networks
The customer appreciates national and international networks with short distances. Major German banks have the potential to constructively reintegrate legal services. The customer relationship is strengthened through transparency and competence. Can only Swiss bankers really offer more problem-solving options from a single source?
Kanzlei Fiala, Freiesleben & Weber Lawyer Mediator Johannes Fiala M.B.A. (University of Wales), Master of Mediation (Univ.) De-la-Paz-Strasse 37, 80639 Munich Phone 089/17 90 90 – 0, Fax 089/17 90 90 – 70 E-Mail:

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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.
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