Consumer Council with giant lawsuit against DNB – Dagbladet.no

The Consumer Council believes 150,000 small savers have paid NOK 690 million too much in fees to DNB and has sued the financial group.

The Consumer Council says on its website that the writ is sent district court in June 2016. In addition to DNB Norway case also the two equity funds DNB Norway I and Avanse Norway I.

the Consumer Council believes DNB has marketed these funds that are actively managed and customers thus have paid for a separate management team will picking out stocks they think will outperform the stock market index. The Consumer Council believes that all the three funds in the period 1 January 2010 to 31 December 2014 were managed passively – as so-called index funds.

Have entitled to a refund

These are funds that automatically reflects the stock exchange index and thus is far cheaper than active mutual funds. The Consumer Council therefore believes that the 137,000 small depositors have been fooled into paying too much.

– DNB’s alleged active funds is six times more expensive than their passively managed index funds. We believe that customers are entitled to a refund of the price difference. DNB rejected all claims in February 2016 and we therefore take the bank to court, writes the Consumer Council.

Based on calculations made by the Financial Supervisory Authority and the Norwegian School of the Consumer Council, however, that all the three funds in the period 1 January 2010 to 31 December 2014 managed that so-called index funds.

Several banks

Such false active funds are often called closet index fund, derived from a metaphor for gays coming out of the closet. The phenomenon is widespread in Europe and the US. Other financial institutions are in the Consumer Council’s spotlight, and may have significance in similar cases, such as through lawsuits against other banks. The performance figures suggest that more banks than DNB has sold customers index funds marketed and priced as actively managed funds.

The financial authorities in both the EU, Denmark and Sweden have taken steps to avoid that small savers tricked into banks closet index fund. Following orders from the FSA at home with all three DNB funds been managed significantly more active after 2014. The fees are also reduced by 22 percent.

Rejects

Head of Information Even Westerveld DNB says NTB that they have not yet seen the subpoena, and that he therefore unable to comment.

DNB has previously denied that small depositors fund DNB Norway are entitled to compensation. For about a month ago said Westerveld to E24 that there is no basis for the claim.

– We also remind that the fund in the period outperformed our customers. Beyond this is a bit difficult to comment on a subpoena we have not received yet, said Westerveld.

Tides effect

Consumer Council points out that when the stock market rises much as serve customers money regardless of the level of fees or the degree of active management.

– This is called tidal effect. When the tide comes in, lifted all boats. Such a claim means that DNB takes credit for the overall market. Lawsuit involves not whether returns, but that customers have paid for active management as they have not got, says Consumer Council.

DNB does not agree with the Consumer Council in January

In January it was announced that DNB would not pay the compensation to 137,000 customers in the fund DNB Norway, a fund Consumer Council believes has not been actively managed. In January he sent the Consumer Council notice to DNB of a claim of 750 million on behalf of clients in the fund.

– Customers over ten years lost 750 million crowns by paying high fees for the management of their savings, it was said from the Consumer Council.

– We do not agree that unitholders are entitled to compensation. In some years, the fund has delivered over benchmark, in other years it has delivered well below. It shows that there has been an actively managed fund, said communications director Thomas Midteide to DN in January.

In the analysis Professor Petter Bjerksund and Professor Trond Døskeland at (NHH) made about the fund on behalf of the Consumer Council, the argument turned into pieces.

Based on the NHH researchers call “an arsenal of performance targets” They establish the fund DNB Norway has not given any significant higher or lower returns, but “roughly the same return as the benchmark.”

A persistent positive or negative excess return could be a sign of active management. But it is not the case for DNB Norway Fund, wrote Finansavisen.

Consumer Council warned class action

– DNB has completely opposite view than us, FSA and NHH. So when we are open to go to class action to get the court to decide the case, said Assistant Director Jorge Jensen Consumer Council at the time.