UPDATED: Norway’s Supreme Court issued a crushing defeat to the country’s biggest bank on Friday, ordering DNB to refund around NOK 350 million to 180,000 customers. The court agreed with DNB’s unhappy customers that they’d paid management fees on investment funds that were much too high.
“I’m damn glad and damn fed up with DNB,” one DNB customer, Tom Loe, told newspaper Dagens Næringsliv (DN). He noted how DNB’s new CEO Kjerstin Braathen, earlier had linked the bank’s strong profits to “satisfied customers,” and compared her to a politician.
“DNB has abused its market dominance and power,” Loe said. “The bank has exploited its imbalance of power over its customers.” He added that he was glad the bank appealed to the Supreme Court, which in turn made a ruling in principle against DNB.
The ruling is being hailed as “extremely important” and a huge victory for consumers. “The main issue of principle in this case has now been clarified,” stated Lise Blyverket, head of Norway’s consumer council (Forbrukerrådet). “If you’ve paid too much for a service, you can demand a refund, also when you’ve bought financial products. That means a lot for very many consumers.”
The consumer council had sued DNB on behalf of the tens of thousands of DNB customers who had invested in three funds that were supposed to have been actively managed by the bank to ensure the highest possible returns. State financial authorities, responding to complaints from bank customers over the funds management, strongly criticized DNB as far back as 2015, claiming the bank’s fees were excessive. Customers backed by the council sued in what became Norway’s largest class-action lawsuit ever.
DNB won in the Oslo County Court, but the consumer council prevailed at the appeals court (Lagmannsretten in Oslo), which ruled that the bank had indeed charged too much for its allegedly active management. That was a major victory for DNB’s funds customers, who were disappointed when DNB appealed its loss to the high court.
Bank concedes defeat
Now DNB officials have conceded defeat in the case involving the bank’s DNB Asset Management division. “We acknowledge that we haven’t prevailed with our view that the funds involved were managed in line with what customers were told,” stated DNB spokesman Even Westerveld. He said the bank would now pay out around NOK 350 million to the fund plaintiffs “as quickly as possible,” and that those owed refunds don’t need to even contact the bank.
“Everyone eligible for a refund will receive a letter either online or in the post, in which they’ll be asked to which account they want their refunds deposited,” Westerveld said. The refunds themselves will average around NOK 1,900 (USD 204) per customer.
Berngt Bangstad of Norway’s shareholder association (Aksjonærforeningen) called the case and the high court ruling “extremely important,” not least because bank- and investment fund customers are already being offered “better and less-expensive” investment products. “We’re seeing the consequences (of taking on DNB) and that’s perhaps the most positive thing about this case,” Bangstad told Norwegian Broadcasting (NRK) Friday afternoon.
He thinks the case has forced the investment fund branch to “straighten up” considerably, while also setting legal precedent that financial institutions also must issue refunds when they’ve overcharged customers.
Blyverket of the consumer council went so far as to call it “an historic day for consumers and the council,” after the Supreme Court not only rejected DNB’s appeal but wrote in its decision that DNB’s funds management had not complied with the agreements signed with fund owners.