This paper explores the potential of introducing an independent ombudsman system to address complaints by consumers against financial services providers (FSPs) in Mongolia by exploring existing dispute resolution systems in Armenia, Australia and Singapore.
Among the similarities of these three systems are: (1) decisions made by the ombudsmen are binding to the FSP if the consumer so agrees; (2) FSPs have seats on the governing boards of the ombudsman systems; (3) FSPs are required to fund part of the cost of the systems; and (4) there is no fee for customers to use the systems, except in Singapore for claims that go to arbitration, in which case customers are charged SGD 50 (USD 37).
The three systems vary in certain aspects, such as Australia’s capping the awards given to consumers at AUD 1 million (USD 670,000) and those to micro- and small enterprises (MSEs) at AUD 5 million (USD 3.4 million). Meanwhile, Singapore’s system covers individuals, but not business customers of any size.
The three countries also have different policies for publishing the outcomes of disputes: Australia does so for FSPs that have at least three complaints; Armenia shares results that establish a precedent; and Singapore generally does not publish the results of disputes, except for occasional case studies.
Regarding establishing a financial ombudsman system in Mongolia, the authors suggest: (1) soliciting corporate input early in the process, while expecting corporate resistance; (2) establishing that ombudsman’s decisions are binding; and (3) minimizing costs to consumers. They also note that smaller countries, such as Mongolia, should begin with ombudsman systems that are “small, simple” and then “grow as needed.”
This is a summary of a paper by Massimiliano Gangi, Jami Hubbard Solli and Jennifer Romero-Torres; published by the Asian Development Bank (ADB); June 2023; 24 pages; available at https://dx.doi.org/10.22617/WPS230219-2.
By Rohit Dayanand, Research Associate
Additional Resources
Armenia’s Financial System Mediator homepage
https://fsm.am
Australian Financial Complaints Authority homepage
https://www.afca.org.au
Singapore’s Financial Industry Disputes Resolution Centre homepage
https://www.fidrec.com.sg
Asian Development Bank homepage
https://www.adb.org
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