Financial ombudsman scheme starts Q1 2016
> Independent and efficient mechanism for consumers to resolve disputes with service providers, says Bank Negara
PETALING JAYA: Bank Negara Malaysia (BNM) expects the Financial Ombudsman Scheme (FOS) to start handling consumer disputes against financial service providers (FSPs) on financial services or products in the first quarter of 2016.
The FOS provides financial consumers with an inexpensive and effective independent redress mechanism with minimum formality to resolve their disputes with FSPs quickly.
The service is an alternative to, and not a replacement for, the courts. FOS services is provided at no cost to consumers.
In a statement yesterday, BNM said the Financial Services (FOS) Regulations 2015 and Islamic Financial Services (FOS) Regulations 2015 (the regulations) came into force on Sept 14, 2015.
“The regulations pave the way for the establishment of an FOS as part of BNM’s efforts to enhance financial dispute resolution arrangements for consumers and to strengthen consumer protection,” it said.
BNM said specific comments and suggestions that were included in the final regulations as well as the operationalisation of the FOS includes providing for the periodic review of monetary limit applied to eligible disputes to ensure that it is reflective of changes in the value of financial services or products.
It will also be imposing a clear duty on directors of the FOS to act at all times in the best interest of the FOS and independently of any particular group or body from which individual directors, might belong to.
It includes affirming a two-stage dispute resolution process comprising mediation and adjudication, which provides ample opportunity for disputing parties to review the relevant facts, issues and disagreements in an attempt to reach an amicable agreement.
“Where an agreement cannot be reached, a decision by the ombudsman must be supported by his reasoning for the decision and is binding on the FSP if accepted by the complainant,” BNM said.
The board of the FOS are required to put in place procedures to accept referrals from FSPs for the sole purpose of its internal review to continuously improve the effectiveness of the FOS.
Such information will also be available for the BNM’s and independent party reviews of the FOS’s operations.
However, BNM said, it will not affect the finality of decisions made by the ombudsman, which is critical to ensure the effectiveness of the FOS as an alternative dispute resolution mechanism.
Lastly, BNM said the FOS will also be adopting a fee structure for funding the FOS to incentivise FSPs to improve the management of complaints while preserving affordable access to the FOS for the public.
“Upon its implementation, the FOS services will be provided to consumers at no cost,” it added.
The proposed FOS framework, covering its scope, membership, funding, governance and resolution process, was published for public feedback on Aug 29, 2014 and had received 55 responses that affirmed broad support for the proposals.