[Newsflash n. 28]
On 11 April 2017, Bank of Italy published a new communication to the market (dated 28 March 2017) regarding unilateral amendment of terms in banking and financial contracts with continuous or periodic performance (contratto di durata) (“Communication”).
According to art. 118 of the Italian Financial Act (TUB) and the legislation on Italian banking transparency, a supervised entity (bank or financial intermediary) is entitled to modify the contractual terms with its clients on a unilateral basis only:
- To the extent this possibility is provided for in the contract;
- If such amendments are justified by an overriding reason.
- The entity notifies the client, in a clear and understandable way, of its determination to change the contractual terms with a two months’ notice. During this time lapse, the client is allowed to either continue the relationship or step back from the contract, without any penalty.
Unilateral changes are never permitted if they introduce new terms to the contract and, in case of mortgage with consumers, amend the interest rate. Unilateral changes that not comply with the above conditions and restrictions are deemed ineffective if they jeopardize the interest of the client.
Through the Communication, Bank of Italy adds clarification to the provision of law presenting a non-exhaustive list of conducts which are deemed to be in in contrast with the transparency principles and may prevent the client to take an informed and conscious decision. The Authority also stresses out that the adoption of unilateral changes is subject to its monitoring and that, in the event of disputes, the client has the right to apply to the Italian Banking Arbitrator (ABF) or the judicial authority.
Finally, Bank of Italy invites the interested market players to assess the measures and internal processes adopted to comply with Art. 118 vis-à-vis the additional clarifications issued with the Communication and points out that, in case of any deficiency, action may be required, including the reimbursement of money already received as a consequence of the unilateral change adopted in breach of the above conditions.
Please do not hesitate to contact us, should you wish to receive further information or clarification on the subject matter of this Newsflash.
Contacts:
Vito Vittore
Senior Partner
Massimiliano Silvetti
Senior Partner
Elena Pagnoni
Of counsel
Luigi Bonifacio
Associate
