As of the first of April 2015, almost 90.000 bank employees can be called upon in disciplinary proceedings by 'anyone' if they act contrary to the Dutch Association of Banks' (NVB) professional rules of conduct. The purpose of this is to enhance the quality and the integrity of the banking sector in the 'public interest'. However, it is questionable whether parties will actually use disciplinary proceedings for this purpose.
'Top managers forced to hand in salary raise'
For example, the Dutch Trade Union Federation FNV has already announced to use disciplinary proceedings in order to 'force top managers to hand in their salary increases'. However, this goal cannot be achieved within the context of disciplinary proceedings. In such proceedings only a judgment can be requested as to whether a banker has complied with the rules of professional conduct. Other scenarios are also imaginable. For example, a disciplinary complaint may be submitted by an entrepreneur, which claims to have suffered damages as a result of the decision to terminate its banking relationship, if he believes this decision is contrary to primarily serving the client's interest, as required by the professional rules of conduct.
Disciplinary proceedings as a springboard for civil liability claims
In such a scenario, disciplinary law is not so much used in the 'public interest', but as a 'springboard' for a civil liability claim against the person or organization which is responsible for the concerned actions. In such scenario the only purpose of a disciplinary complaint is to use the judgment as a basis for its liability claim in civil proceedings. Experience with disciplinary law in other sectors (such as accountants, lawyers and civil-law notaries) shows that this is common practice. In the majority of the disciplinary complaints we handle, this situation occurs.
Less complicated and costly
In disciplinary proceedings it is relatively easy to acquire a substantiated judgment from experts on the professional (in)correctness of a banker's conduct. A complaint generally does not need to comply with extensive (formal) requirements, there is no mandatory legal representation, there is no or only an insignificant court fee and the procedure itself is in most cases reasonably informal. Moreover, by means of disciplinary proceedings it is also possible to acquire important confidential information, which would not be accessible by the complainant otherwise. After all, the banker involved will have to substantiate its defense supported by documentary evidence. All of this is much more complicated, lengthy and costly in civil proceedings.
No liability per se
The judgment of a disciplinary tribunal that there has been conduct contrary to the rules of professional conduct, does not lead to the establishment of liability in civil proceedings per se. However, in many cases the civil court attaches great value to the judgment of the - often much more specialized - disciplinary tribunal.
Prominent role for the prosecutor
Whether the aforementioned practice will develop itself to this extend in the banking sector, will depend greatly on the Dutch Securities Institute (DSI). In the structure of the disciplinary banking law a prominent role has been granted to the DSI. The DSI does not only decide which complaints will be processed or not, but also acts as prosecutor. As a result, the person that originally brings the complaint - in contrast to other disciplinary law - is not a formal party to the proceedings. The complainant only receives a copy of the judgment. For private individuals and smaller enterprises this could be advantageous: in case the DSI takes over the complaint, it will be handled professionally. For larger professional parties and matters with a large (financial) stake, this might be different. It remains a question whether these parties would be willing to hand over authority over the disciplinary proceedings to the DSI.
All in all the significance and effectiveness of the Dutch disciplinary banking law will have to prove itself. In view of experiences in other sectors, the significance of disciplinary law for banks in light of possible civil liability claims should not be underestimated.