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

Yerevan, April 8-9 Financial Ombudsman Institute: increasing public confidence and enhancing financial mediation FINANCIAL SYSTEM MEDIATOR OF ARMENIA Introductory presentation Hranush Aghayan Case Investigator

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 organization  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 of the customer lodging the claim is not bad-faith

Case handling process Enquiries received via phone, visits, email and mail No Yes The enquiry is within our jurisdiction Yes No We provide advice and The customer has already filed the refer to other institutions complaint with the financial organization We help to file Ask the customer the complaint, to fill-in the and keep truck complaint form of the enquiry Next The complaint investigation process starts

Claim/complaint investigation process • Sends a letter with a copy of a claim to the financial organization against which action has been brought The Mediator • According to the Law the organization has to cooperate with the Mediator • During 14 days the Organization shall answer the Mediator Financial attaching all required documents Organization • 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 The additional fourteen days Mediator

RA legislation Study all requirements; documentation norms of business and other conduct and ethics materials Independent advisers, hearings with participation of both parties Mediator makes conclusions about the case

Complaint investigation process is complete No Yes The complaint is subject to compensation No The Mediator rejects the claim Yes The complaint is handled through negotiations/mediation The Mediator makes a The organization is final decision to honor Both parties are notified compensating the or partially honor the about the decision customer claim The customer calls No Yes The customer back his/her Yes No The customer agrees with the complaint agrees with decision the decision The decision is The decision is binding for binding for The mediator makes a both parties both parties decision to terminate the investigation

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

Mediator’s decision Enforcement of the Decision Appealing Against Decision Customer shall be entitled to apply to Parties may appeal against Financial a competent court for obtaining an System Mediator’s binding decision by enforcement order, in which case court addressing a competent court with an shall examine the application within appeal on invalidating it. three days and provide one of the A competent court shall invalidate following rulings: Financial System Mediator’ mandatory 1) Financial System Mediator’s decision, if: decision and issue enforcement order; 1) the claim is not subject to or examination by Financial System 2) invalidate Financial System Mediator; Mediator’s decision and reject 2) Financial System Mediator took a issuance of enforcement order. 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 0 Investment companies 0 Other 0

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

Complaints received by the Office during 2009, by month 70 60 50 40 30 20 10 0

Complaints received by the Office during 2009, by quarters

Thank you for participation and attention!!!