The settlement ends a simmering conflict. The consumer advice center had warned Trade Republic because the broker invested customer funds partly in money market funds but gave the impression in advertising that deposits were fully protected by the statutory deposit insurance up to 100,000 euros. Money market funds are not covered by this protection.
Niels Nauhauser, head of the banking and retirement provision department at the consumer advice center of Baden-Württemberg, confirmed the settlement. Trade Republic has pledged to stop using certain formulations in advertising for its interest rate offer. Specifically, the claim “Interest on your cash, unlimited” was at issue, which in the view of consumer advocates suggested a permanently valid interest rate. In fact, Trade Republic adjusts the rate to the European Central Bank’s (ECB) deposit rate.
The hearing scheduled for the beginning of this week at the Berlin Regional Court II was canceled. A court spokesperson said the parties had announced an out-of-court settlement. Trade Republic itself declined to comment when asked. The neobroker’s website has since been adjusted: It now states that customers receive “interest from partner banks and dividends from money market funds,” and a market risk warning has been added.
Source: www.handelsblatt.com
