New law in Spain creates Independent Authority for the defense of financial consumers.

The recent draft law proposing the creation of the Independent Authority for the Defense of Financial Customers marks an important milestone in the regulation of the insurance sector in Spain. This legal framework not only seeks to strengthen consumer protection but also introduces a system for extrajudicial conflict resolution that promises to be more accessible and effective than traditional mechanisms. Through this new legislation, it is expected that customers of insurance entities will be able to resolve their disputes more quickly and at a lower cost. One of the main modifications contemplated is the amendment of Article 119 of Law 20/2015, known as LOSSEAR. This change will allow the new Independent Authority to coexist with the current Complaints Service of the Directorate General of Insurance and Pension Funds (DGSFP). Unlike the reports from the latter, which are non-binding, the decisions of the new Authority will be binding in certain cases, although the option to resort to the courts will always remain. The law proposes a system that will be voluntary for customers but mandatory for insurance entities. This means that customers will have the option to turn to this new Authority to resolve their claims, while companies will be required to accept and manage these requests. This balanced approach could foster greater consumer confidence in the financial system, as they will have an effective resource available to assert their rights. The scope of the new Authority extends to a wide range of claims that clients can present, including both individuals and legal entities. This is significant as it broadens the spectrum of protection by including potential policyholders, insured parties, beneficiaries, and other affected parties. This inclusion is a step toward greater equity in access to justice for all actors involved in the insurance sector. In terms of the claims that can be addressed, the law focuses on those cases where the rights and interests of customers not considered "large enterprises" may have been violated. This encompasses situations that occur before, during, or after the conclusion of an insurance contract. By specifically addressing the improper conduct of insurance entities and the application of abusive contractual clauses, the law aims to prevent behaviors that could harm consumers. The conduct rules mentioned in the draft are broad and cover everything from premium rates and information duties to product governance and the self-regulation codes of entities. This comprehensive approach translates into greater responsibility for insurers, requiring them to adhere to stricter standards that protect their clients. A crucial aspect of the new law is the definition of "abusive clauses," which is based on rulings from the Supreme Court and other judicial instances. This promises to increase transparency in the interpretation of insurance contracts and provide consumers with greater clarity about their rights. Furthermore, the law details how the Authority's decisions will vary depending on the amount claimed, establishing a threshold of 20,000 euros to determine the binding nature of the resolutions. However, not all claims will fall under the jurisdiction of this new Authority. There are exceptions that will be assigned to other instances, such as the courts and labor authorities, in cases involving collective insurance, data protection, or large risks contracts. This segmentation is important to ensure that more complex cases are handled appropriately by the most qualified entities. The implementation of this law and the creation of the Independent Authority are significant steps towards a more robust regulatory framework in the insurance sector. The possibility of accessing extrajudicial conflict resolution could transform the way consumers interact with their insurers, offering a more direct and less formal resource than traditional judicial processes. In conclusion, the new law not only seeks to protect the insured customer but also establishes a new paradigm in the relationship between consumers and insurance entities in Spain. With the hope of improving customer trust and satisfaction, it opens a path towards greater transparency and accountability in the sector. This advancement reflects the evolution of financial regulation, adapting to the needs of a society that demands greater protection and justice in the realm of financial services.