After four years, countless hours and 1.42 million euros spent, we won the biggest group action suit in the history of our country against Norway’s biggest bank. The cheers were many, but so were the lessons.
Background
In 2015, The Financial Supervisory Authority of Norway found that DNB – the leading bank in Norway – had misled consumers. During their investigation into DNB’s largest actively managed fund for consumers, they found that the bank’s management of the fund had diverged considerably from what the investors were led to expect, and consequently imposed a corrective order on DNB Asset Management AS. The Norwegian School of Economics subsequently conducted their own studies into the bank’s management of their funds, and found that an additional two funds had been sold to customers as “actively managed funds” when in reality they were being passively managed.
DNB’s active managed funds are six times more expensive than their passively managed funds.
The Norwegian Consumer Council demanded that the affected customers should get a price reduction equivalent to the difference between actively and passively managed funds. DNB declined this demand. Thus, we decided to take them to court. On 21 June 2016, we filed a lawsuit against DNB, asking that the bank’s overcharge of 45 million euros be refunded to the 180 000 affected consumers.
Opt-out
The only possible way to handle a suit of this magnitude was to represent all affected consumers unless they specifically requested to opt out. The court advertised the case in major media, and it received much attention. We are thus confident that we managed to reach those consumers, which we are representing. In the end, very few chose to opt out.
Today, the sad fact is that most European consumers are not able to get redress when their rights have been breached.
The only possible way to handle a suit of this magnitude was to represent all affected consumers unless they specifically requested to opt out. The court advertised the case in major media, and it received much attention. We are thus confident that we managed to reach those consumers, which we are representing. In the end, very few chose to opt out.
We lost in the first round, but appealed the decision.
The decision to file a group action suit against Norway’s biggest bank was not easy, and it was even harder to file the appeal.
On Thursday 9 May the court of Appeal ruled for the consumers! They found that DNB had overcharged their customers by 0.8 %, and that 34.5 million euros should thus be refunded to the 180 000 affected consumers. The court also ruled that our legal costs, amounting to 1.42 million euros, should be awarded against DNB.
By June 9, we will know if DNB appeals the decision to the Supreme Court.
Worth it?
Since we won our appeal, it is easy to say «yes, it was worth it». However, we do not know if DNB will appeal, and if they do, in whose favour the Supreme Court will find. It is difficult, and quite frankly painful, to assess the hours spent on this lawsuit, and the final price will be even higher if the case ends up in the Supreme Court. The decision to file a group action suit against Norway’s biggest bank was not easy, and it was even harder to file the appeal. But, our job is to represent and fight for the consumers, and they had been wronged.
Firstly, we truly believe that the consumers we are representing have a right to a refund. They were overcharged for a service they did not receive, and we see no extenuating circumstances for why they should not get a price reduction.
Secondly, we had never tried a group action suit, and we felt committed to make use of it. We are very lucky to have access to such a system, and thanks to it, Norwegian consumers are better protected. However, we did realise that we do not as an NGO have the resources to try other equally relevant cases within the current Norwegian system.
We need RAD
Although our experiences with our own group action were mostly positive, they were also expensive and extensive. We therefore see a clear need for the Representative Action Directive (RAD) in Norway.
The Commission proposal for Representative Actions will introduce a number of positive novelties, that could make the whole procedure more manageable for consumer associations. That is not to say that such a responsibility should be taken lightly or abused, only that it should be easier than it is today for consumers who have been wronged to claim their right.
Today, the sad fact is that most European consumers are not able to get redress when their rights have been breached. For a Europe that prides itself on being consumer friendly, that is simply not good enough!
Audun Skeidsvoll is director of consumer policy at Forbrukerrådet (the Norwegian Consumer Council.