Liability issues in relation to Falk Fonds by the financing bank
In the course of our daily work we often experience that lawyers and courts do not make any distinction between insurance brokers and investment brokers. In the wake of the EU Insurance Mediation Directive, more and more market participants are assuming that pecuniary loss liability insurance (PII) will become a mandatory requirement for all intermediaries, regardless of the different professional titles in the insurance and investment sectors. Also working bases like the obligation to information in advance to the customers, concrete discussion expiries, as well as following protocols over the discussion process become probably in the future for all mediators an inevitable basis. So all intermediaries would do well to immediately deal with the increasing liability problem and the right VSH insurance. This is especially true in view of the fact that more and more companies, which are to be held liable in the event of a claim, intend to pass on the liability to the intermediaries.
The specific case: a fund investment in the Falk Fonds 75.
A letter from the financing bank has been received from an intermediary. In this letter, the bank asks him to answer 22 detailed questions about his advisory services in the aforementioned case. The possible objective and obvious danger for the intermediary: the possible liability of the bank due to doorstep selling could (or should?) be shifted to a possible faulty advice of the intermediary. In order for something like this to come about, it is necessary for the intermediary to be able to make a concrete accusation on the basis of his own statements. If you take a closer look at the 22 questions, it quickly becomes clear what this is all about. The postscript in the bank’s letter “if we do not receive this information from you, or receive it inadequately, we must reserve the right to give you notice of the dispute” probably speaks for itself. As is so often the case in this industry, it is the intermediaries who serve as (paying) scapegoats alongside the customers who suffer. In the end, they are supposed to take the blame for a situation that was created by initiators and supported by other large companies. Whoever has caused or is responsible for the negative situation, in order to limit the damage and as liable parties, the intermediaries should be held jointly responsible. Another reason to secure the protection and also the defence and exemption claim of a pecuniary loss liability in good time. The VSH insurer’s response to the intermediary’s request whether to answer the questionnaire is in the affirmative. However, he points out to the intermediary that he must not make any admissions of guilt when answering, as otherwise the insurance cover would be jeopardised.
Our conclusion for intermediaries from the story is quite simple and clear:
1. it is essential that you secure yourself immediately and promptly with a VSH = pecuniary damage liability insurance policy that is suitable for you, 2. work consistently in such a way that your way of working complies with the new expected legal basis of mediation (information and documents handed out in advance as well as delayed closings – at the earliest in the second or third appointment, etc.) 3. look for an experienced and independent partner in pecuniary loss liability, a provider who can also support you as a broker in the event of a claim. 4. since intermediaries are on the “liability front”, they should keep all relevant documentation in order to limit their risk. This also includes the training provided by the suppliers. If no more documents are available, the expert archive at www.experten.de can help in many cases. 5. look for a professional association such as the VSAV e. V., which, among other things, will provide you with contacts to experienced and professional lawyers in the industry. 6. because to fill in such questionnaires without the professional help of a lawyer is to be considered as gambling or a kind of “hara-kiri action”. Below we have attached the list of questions that we have commented on with Attorney Fiala.
(wmd-brokerchannel.de (14.09.2006)
Courtesy ofwww.wmd-brokerchannel.de.
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About the author
Dr. Johannes FialaPhD, 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.
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