Advisory Protocols, Better Protection for Investors. No more sales pitches without a consultation protocol: banks and savings banks are obliged to document all investment advice given to private customers. The consumer advice centre explains what customers should pay attention to.
WHAT ARE THE GOALS OF THE RECORD REQUIREMENT?
The law is intended to better protect private customers from wrong investment advice. Investment advisors now have to document every consultation on securities with a log and give their clients the record before a deal is concluded. This should enable investors to check whether the consultation was reproduced correctly.
The protocol is also intended to support customers in a dispute between investors and financial institutions due to incorrect advice. They should be able to refer to it in court. So it is conceivable that a log shows that a customer has requested a risk-free form of investment. If the institution has nevertheless recommended a risky security investment, it must prove that it advised correctly despite this obvious contradiction.
In addition, the statute of limitations for claims for damages due to incorrect advice has been adjusted: Investors now have up to ten years to claim damages in court for incorrect advice. But be careful: This period is shortened if the investor realizes (or has to realize) that he was advised incorrectly. Before the new regulation, the period was only three years.
ATTENTION! When it comes to the question of when a claim for damages due to incorrect advice expires, there are many special features to consider. It makes a difference whether the consultant acted deliberately or just negligently. The investor’s knowledge of advisory errors and the timing of the advisory change also change the calculation. If in doubt, have a lawyer examine possible claims for damages and their statute of limitations.
For consultations that do not involve securities, no consultation protocol is required. Advice on, for example, overnight money accounts or entrepreneurial investments is therefore not affected by the protocol requirement.
WHAT IS IN THE CONSULTATION PROTOCOL?
How the consultation protocols look in detail is left to the banks themselves – the legislature only makes general requirements. The protocol must then contain:
- the reason for the consultation,
- the duration of the conversation,
- the information relevant to the consultation about the personal situation of the customer,
- Information about the financial instruments and investment services that are being discussed,
- the wishes and investment goals of the client and their weighting and
- the product recommendations of the consultant and their justification.
The consultant must sign the protocol and give a copy to the client – before closing a deal. If this is not possible – for example, when providing investment advice over the phone – the advisor must send the client the minutes immediately.
In this case, he must also note in the minutes that the customer has expressly requested a transaction before receiving the minutes. And: The bank must grant the customer a one-week right of withdrawal in the event that the protocol is incorrect or incomplete. This must also be noted in the protocol. The customer does not have to sign the protocol himself.
WHAT CUSTOMERS SHOULD PAY PARTICULAR ATTENTION TO?
The protocol is intended to protect customers. However, this protection can only work if you carefully check the log before purchasing an investment product:
- Pay attention to completeness: The minutes must contain information about the occasion, the course and the duration of the consultation. The personal situation of the customer, his wishes and investment goals must also be documented. The products recommended by the advisor and the reasons for his recommendations must also be listed. The consultant has to sign the protocol and give a copy to the client.
- Read the minutes carefully: Read the documents your bank advisor gave you. And insist on changes if you notice discrepancies or if the content of the minutes does not match the course of the conversation. Is your personal situation presented differently from the way you described it? Do the logged investment goals not match your specifications? Can’t you understand the reason for recommending a product? Then point this out to your advisor.
- Do not sign the protocol: You should also know that the law does not require you as a consumer to sign the protocol. Only the signature of the consultant is mandatory. If your bank insists on a signature anyway, this is not intended to protect the investor – but to secure the bank. In the event of a dispute over incorrect advice, the bank will want to interpret your signature as if you had accepted the content of the minutes.
- Use right of withdrawal: Remember that you have a right of withdrawal if you have concluded an investment transaction by telephone and do not receive the minutes before the transaction is completed. In this case, you can still resign from the deal for a week after receiving the minutes. This right of withdrawal only applies if the protocol is incorrect or incomplete – it is not an unrestricted right of withdrawal as is the case with other distance selling transactions. Nevertheless, if you get into a dispute with your bank because you are withdrawing from a transaction, the bank has to prove that the record was correct – not you as a customer.
- Please do not rely on the minutes alone: Especially when it comes to important consultations, you should not rely on the minutes alone. Take a witness with you to the bank who can confirm your view of things afterwards in the event of a dispute. Make sure, however, that your witness does not become a contractual partner with you. If you bring your spouse as a witness, then they should not close the deal with you. In this case, he can no longer be a witness.