Hranush Aghayan Case Investigator Background information About the - - PowerPoint PPT Presentation

FINANCIAL SYSTEM MEDIATOR OF ARMENIA

Introductory presentation

Hranush Aghayan Case Investigator

Yerevan, April 8-9

Financial Ombudsman Institute: increasing public confidence and enhancing financial mediation

Background information

About the financial system mediator office

• An independently-governed institution
• Founded by the Central Bank of Armenia
• With a mission of resolving pecuniary

(involving direct/indirect loss or orders) disputes between individual consumers and financial organizations

Objectives

• To protect rights and interests of

financial sector consumers

• To provide quick, efficient and free of

charge examination of their claims

• To increase public confidence towards

financial system and enhance financial mediation

Reasons of creation

The creation of Mediator was necessitated by the absence of a specialized ADR scheme to resolve consumer complaints The only ADR in the banking system was the Mediation Court functioning in attachment to the Association of Banks

 Mediation Court had jurisdiction only in case of a signed mediation agreement between the parties, whereas a customer shall have the right to apply to Financial System Mediator irrespective of the fact whether such right is established under the agreement signed between Customer and organization or not. Any consent or condition limiting Customer’s right to apply to Financial System Mediator shall be considered invalid.  There were 11 judges at The Mediation Court, ten of which were the representatives of banks, whereas The FSM has an independent governance structure.  The case investigation process at the Mediation Court was time- consuming, rather costly, and complicated, whereas at FSM the complaint review process is simple, swift, and transparent and free of charge.

International Experience

• The experience of over 40 countries was

studied

• According to the EU Reccomendations

for redress bodies

• Is based on the EU princeples:

Impartiality, Transparency, Effectiveness, Fairness

Organizational Structure

Complaints handled by the Mediator

Actions can be brought against the following Organizations

An entity having license provided by the Central Bank of the Republic of Armenia:  banks  credit organizations  insurance companies  insurance brokers  investment companies  pawnshops  foreign exchange traders, dealer or broker  money transfer organizations  stock exchange  Central Depository of Armenia Exceptions:  persons licensed for foreign exchange trade auction operations and carrying out processing and clearing of payment instruments and payment and settlement documents.

Complaints meeting the following criteria can be reviewed by the Mediator

 The complaint shall be lodged by an individual who uses financial organization services, or applies for using them  The underlying activities or inactivity for the complaint shall have taken place after August 2, 2008  The complaint was first lodged with the financial

• rganization

 The complaint was lodged with the Mediator within six months of the date of receiving the organization’s final response (or receiving no response)  The complaint contains cash or property claim (pecuniary claim not exceeding 10 million Armenian drams

Complaints meeting the following criteria can be reviewed by the Mediator

 There is no court or arbitration tribunal ruling regarding the same complaint/claim  A case is not pending before any court or arbitration tribunal regarding the object of the same complaint/claim  The same complaint has not previously been reviewed by the Mediator  The license of the organization (against which the claim is lodged) has not been terminated  The claim has been signed by a person who has legal capacity to act; and  The claim is not manifestly defamatory and the conduct

• f the customer lodging the claim is not bad-faith

Enquiries received via phone, visits, email and mail

We provide advice and refer to other institutions

The customer has already filed the complaint with the financial organization The enquiry is within

• ur jurisdiction

No Yes

We help to file the complaint, and keep truck

• f the enquiry

No

Ask the customer to fill-in the complaint form

Yes

Case handling process

The complaint investigation process starts

Next

The Mediator

• Sends a letter with a copy of a claim to the financial organization

against which action has been brought

Financial Organization

• According to the Law the organization has to cooperate with the

Mediator

• During 14 days the Organization shall answer the Mediator

attaching all required documents

The Mediator

• Shall examine the claim and take a decision thereof within fourteen

working days after receiving explanations from Organization

• May at his/her discretion extend the fourteen day deadline by

additional fourteen days

Claim/complaint investigation process

Mediator makes conclusions about the case

Independent advisers, hearings with participation of both parties RA legislation requirements; norms of business conduct and ethics

Study all documentation and other materials

Complaint investigation process is complete

The Mediator rejects the claim

The complaint is handled through negotiations/mediation

The complaint is subject to compensation

No Yes

The Mediator makes a final decision to honor

• r partially honor the

claim

No

The organization is compensating the customer

Yes

The customer calls back his/her complaint Both parties are notified about the decision

The customer agrees with the decision

The decision is binding for both parties

Yes No

The customer agrees with the decision

The decision is binding for both parties

The mediator makes a decision to terminate the investigation No Yes

The advantages of mediation

• Faster and easier outcome of the case
• No precedent is formed against the
• rganizations
• No court expenses/charges
• The customer continues to trust the
• rganization
• Good PR, “The best cooperating
• rganization”

Mediator’s decision

Enforcement of the Decision Customer shall be entitled to apply to a competent court for obtaining an enforcement order, in which case court shall examine the application within three days and provide one of the following rulings: 1) Financial System Mediator’s decision and issue enforcement order;

• r

2) invalidate Financial System Mediator’s decision and reject issuance of enforcement order. Appealing Against Decision Parties may appeal against Financial System Mediator’s binding decision by addressing a competent court with an appeal on invalidating it. A competent court shall invalidate Financial System Mediator’ mandatory decision, if: 1) the claim is not subject to examination by Financial System Mediator; 2) Financial System Mediator took a decision with violation of procedural rules established by this law; 3) facts testifying about Financial System Mediator’s prejudice have been identified.

Statistics

Statistics for the Year 2009

Total number of complaints received during 2009 378 Eligible for review by Mediator 196 Resolved based on complaint/claim filed against the organization in question 40 Taken in for review upon presentation of a claim in writing 57 Claim satisfied through reconciliation/mediation 33 Claim refused 18 Claim partially satisfied by a compulsory decision 2

Of which…

Total number of claims in writing during 2009, which were filed against 57 Banks 33 Insurance companies 16 Credit organizations 4 Pawnshops 4 Exchange offices Investment companies Other

Reimbursement/Compensation

• 61% of claims in honor of the customer
• 26 mln AMD = 50,000 EUR compensation

granted

Total value of Client reimbursement during 2009, including: 26,062,88 6 100% Reimbursement on claims against banks 15,076,77 2 57.85% Reimbursement on claims against insurance companies 9,062,250 34.77% Reimbursement on claims against credit organizations 1,775,684 6.81% Reimbursement on claims against pawnshops 148,180 0.57%

Complaints received by the Office during 2009, by month

10 20 30 40 50 60 70

Complaints received by the Office during 2009, by quarters

Thank you for participation and attention!!!