Banking Ombudsman for Bangladesh
Sunday, 12 April 2009
M. S. Siddiqui
QUICKER dispensation of justice needs to be ensured because "justice delayed is justice denied". But, while doing so, it must not be ignored that "justice hurried is justice buried".
The due process of law must not be compromised in any attempt at providing speedy justice.
In India, before filing a suit a bank ensures that the loan documents are complete in all respects and that the suit is well within the limitation period. The documents are examined by the bank's approved lawyers. Before filing of the law suit, the bank serves notice upon the client concerned. All the deposits obtained as security and or collateral security are appropriated towards the outstanding before filing of the suit. All the assets of the company, to be sued, such as machinery, vehicles, and shares in the custody of the bank is disposed of and the sale proceeds are appropriated towards the outstanding in the account before filing the case for the recovery of the residual amount.
Only lawyer on the bank's panel files the suit. Before filing of the suit, information regarding movable and immovable assets of the borrower and the guarantor is ascertained and steps are taken for attachment of these properties before the court delivers its judgment. The bank branches approach 'Lok Adalats' (people's court) where they exist for speedy disposal of the cases. However, in case the suit is to be compromised in the Lok Adalat, the compromise terms have got to be approved from the Head Office.
With a view to accelerating the recovery process by way of filing suits, the Chairman, Deputy General Manager and Assistant General Manager can be vested with powers for filing suits as under. (Recovery policy of State Bank of India)
Many countries of the world have Banking Ombudsman. "As institutions (Ombudsman) delivering Alternative Dispute Resolution (ADR) services, we could benefit from innovations that have taken place in investigation techniques used by other ADR players such as mediators and conciliators. We know, for example, that mediations are usually concluded in one day, yet this is not at the cost of gathering of facts and weighing of options for resolution of disputes. How can we incorporate the procedures followed by the mediators, in our investigation techniques?
In addition, we could also look at techniques used by the private sector Ombudsman, whose operations, one would imagine, are unbridled by detailed procedures defined under law. Of course, while integrating investigation techniques, procedures and instruments used by our more nimble counterparts, we have to consider the changes in work culture they will bring in tow, but innovate we must. (President of Asian Ombudsman Association- paper at the Second Asian Ombudsman Conference, March 25. 1997, Seoul, Korea)."
The jurisdiction of the Ombudsman extends to maladministration which includes bias, neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude, arbitrariness, action contrary to law, malafide, rudeness, refusal to answer reasonable questions, knowingly giving misleading or inadequate advice, corruption, discrimination, neglecting established rules, procedure and practice and failure to mitigate the effects of rigid adherence to the letters of law where it produces manifestly inequitable treatment. Maladministration always results in injustices which should be redressed by the Ombudsman. (The Role of Ombudsman in the Safeguarding civil rights: Mr Justice Saleem Akhtar, Federal Tax Ombudsman, Pakistan)
Under the ombudsman system, reliable experts listen to public grievances about the administration. They identify the cause of these grievances from a neutral standpoint, and try to resolve associated problems. The Ministry of Public Management, Home Affairs, Posts and Telecommunications, which promote a system of "Administrative Counsellors" to listen to grievances and opinions concerning the administration from the Japanese public, is a member organisation of the Asian Ombudsman Association (AOA).
In determining whether to undertake, continue or discontinue an investigation, the Ombudsman will, subject to the provisions of this Ordinance, act in accordance with his own discretion; and any question whether a complaint is duly made under this Ordinance will be determined by the Ombudsman.
The Banking Ombudsman Scheme, 2006, enables resolution of complaints of bank customers relating to certain services rendered by banks to redress customer complaints against certain deficiency in banking services.
A quasi-judicial body, the Banking Ombudsman has the power to summon both the parties -- the bank and its customer -- to facilitate resolution of complaint through mediation.
In India, the Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complainant and the bank named in the complaint. If the terms of settlement, offered by the bank, are acceptable to the complainant, the Banking Ombudsman passes an order as per the terms of settlement which becomes binding on both the parties.
If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.
For passing an award, the Banking Ombudsman is guided by the documentary evidence placed before him by the parties, the principles of banking law and practices, directions, instructions and guidelines issued by India's central bank, the Reserve Bank of India and such other factors, which in his opinion are necessary in the interest of justice. He will have at the best a marginal role in dispute resolution in case of debt restructuring and/or insolvency issues. His mandate is limited to handling complaints relating to banking malpractices, inordinate delays, corruption, maladministration, etc.
In order to make the institution of Ombudsman effective it requires to be strengthened, particularly in developing countries, gripped by poverty, corruption and maladministration. It is time for the AOA to form a committee to study and recommend the removal of the lacunas and restrictions imposed on the jurisdiction and power of the Ombudsman, which create hurdles to providing relief to people. A model Uniform Ombudsman Law is needed by all the Asian nations.
The Banking Ombudsman Scheme, 2006 of India, facilitates resolution of complaints of bank customers relating to certain services rendered by banks. The Banking Ombudsman is appointed by the central bank of India to redress customer complaints against certain deficiencies in banking service.
The Financial Services Authority (FSA) of the UK set up the Banking Ombudsman. In the UK, the Ombudsman draws specialist knowledge, mediates informally, investigate complaints. Customers get free service. The Ombudsman looks into law, regulations, regulator's rules, relevant codes and good industry practices.
In New Zealand, the Office of the Banking Ombudsman is appointed by the Bankers' Association. The Banking Ombudsman Scheme provides an impartial redress mechanism for customers (personal and business) unable to resolve a dispute with their bank. All members of the Bankers' Association subscribe to the Banking Ombudsman Scheme and the procedure for making a complaint with the Banking Ombudsman is set out in the Code. Under the Code, the Bankers' Association members must first attempt to deal with a customer's complaint internally before referring it to the Banking Ombudsman. The New Zealand Bankers' Association's (NZBA) Code of Banking Practice came into force on December 02, 2002. The bankers go to the Ombudsman to resolve disputes with the customers.
In 1993, the office of the Swiss Banking Ombudsman was established. The sponsor of the Swiss Federal Banking Commission is the Swiss Banking Ombudsman Foundation. The Swiss Banking Ombudsman Foundation is set up by the Swiss Bankers' Association. Its main function is to handle the complaints, usually raised by the customers on an annual basis.
A quasi-judicial authority, the Banking Ombudsman has the power to summon both the parties -- the bank and its customers -- to facilitate resolution of a complaint through mediation.
The Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complainant and the bank named in the complaint.
The Ombudsman will have at the best a marginal role in dispute resolution in case of debt restructuring and/or insolvency issues. His mandate is limited to handling complaints relating to banking malpractices, inordinate delays, corruption, maladministration, etc. (A Banking Ombudsman Act 1997, Pakistan).
FIN-NET is the Europe-wide network of financial ombudsmen and consumer-complaints organisations - covering the 30 countries in the European Economic Area (EEA) - that is the European Union plus the European Free Trade Area. Its job is to help synchronise communications when a consumer living in an EEA country has a complaint against a financial service's business based in another EEA country.
The Financial Ombudsman Service is a founder member of FIN-NET. And the principal ombudsman, David Thomas, has been with FIN-NET from the start.
He says: One of the principal tasks of the European Union is to develop the internal market - the cross-border trade between different member states. And the European Commission began to take an interest in ombudsman schemes since 1997.
'Of course, that was before the Financial Ombudsman Service came into existence in the UK. At that time, the different areas of financial services had their own, separate, complaints-handling schemes. I was the banking ombudsman then, and I began being invited to meetings in Brussels.
These meetings became more frequent and the remit gradually grew wider as representatives from the insurance and investment complaints-handling organisations started to join us.
The objective of the meetings was partly to learn more about what was going on in Europe. It was also to help the European officials find out more about how the complaints against the financial services were dealt with in the different countries. We were also looking at how consumers could be given greater confidence to buy financial services cross-border. Clearly, if you buy anything from a different country, you want to know what you can do should something go wrong? Out of that arose the notion of FIN-NET - a network of the various financial ombudsmen and consumer-complaints organisations in Europe.
Any scheme or body within Europe that deals with financial dispute-resolution can become a member of FIN-NET provided it meets certain standards. Members agree to co-operate to assist consumers who have cross-border complaints.
The Banking and Financial Services Ombudsman (BFSO - formerly the Australian Banking Industry Ombudsman is a free mediation service resolving disputes between individuals and small business customers and their banks. This service is generally accessible for disputes where the losses claimed are worth less than $150,000. If a customer is overcharged or he or she suffers financial loss due to the bank's faults, he or she can go to the bank's Customer Relations Department to resolve the issue before lodging a complaint with the Ombudsman.
The Ombudsman in Germany is the result of the initiative of the German commercial banks for ensuring fair deal to the customers. The German Ombudsman is an independent, impartial conciliator. After consultation with the consumer organisations, persons were appointed Ombudsmen of the private commercial banks.
Established by the banks and not by the government or an act of parliament, the German Ombudsman attends to customers' complaints.
The Constitution of Bangladesh affirms the inelinable right of the individual to enjoy the protection of the law and to be treated in accordance with law. In particular, it emphasises that no person shall be prevented from, or hindered in, doing what is not prohibited by law and no person shall be compelled to do that which the law does not require him to do.
Now a new trend has developed to appoint ombudsman for departments or services. Different from classical ombudsmen, they have been appointed for revenue, banking, insurance, police, health services, education, army, judiciary or other sectors. In Pakistan, Federal Tax Ombudsman was appointed in 2000 to diagnose, investigate redress and rectify any injustice done to a person due to maladministration by taxation functionaries.
Identification of maladministration without providing relief and implementing the recommendation does not serve the purpose of Ombudsman. In many countries the Ombudsman system has been criticised as a toothless and ineffective organisation as it has no power of enforcement.
But in certain countries, the Ombudsman or Tax ombudsman has the power to enforce his decision. In the USA, Tax Payer Advocate Service helps taxpayers resolve problems with the Internal Revenue Service and recommend changes that will resolve the problems. In Taiwan, the Control Yuan receives, handles and investigates complaints people against malfeasance and dereliction of government agencies. It proposes corrective measures, impeaches public servants who break the law, protects the rights and interests of the people, ensures social justice and promotes a clean and competent governance.
In New Zealand, the Ombudsman is empowered to report on any decision which is unreasonable, unjust, based on mistake, or merely wrong.
In Pakistan, the statute provides that it shall be the duty of the Revenue Division to implement the finding made by the Federal Tax Ombudsman.
Customer Ombudsman of the Valencian Federation of Savings Banks is somewhat different Ombudsman. Responsible for safeguarding the interests of customers in their relations with the region's savings banks, the Valencian Savings Bank Ombudsman is named by the General Council of the Valencian Federation of Savings Banks through a resolution passed by an absolute majority of its members.
Under a legislative decree, the official domicile of the Ombudsman's Office has to be the official domicile of the Valencian Federation of Savings Banks.
Bangladesh needs to study the whole issue to opt for Ombudsman to address number of issues, not suitable to resolve by a court. The issues can be resolved through mutual discussion and mediation by independent quasi-judicial Banker's Ombudsman. The amended Aurtho Rin Adalat Acts for reconciliation meeting or mediation needs to be further amended to simplify the conditionalities for fair mediation. The existing process which goes beyond the concept of traditional 'Shalish' (conciliation) of our society and probably against the basic human rights cannot be effective and efficient. Bangladesh needs Banker's Ombudsman free, fair and unconditional mediation.
The writer, a part time lecturer at Leading University, Dhaka Campus, can be reached at e-mail: shah@banglachemical.com
QUICKER dispensation of justice needs to be ensured because "justice delayed is justice denied". But, while doing so, it must not be ignored that "justice hurried is justice buried".
The due process of law must not be compromised in any attempt at providing speedy justice.
In India, before filing a suit a bank ensures that the loan documents are complete in all respects and that the suit is well within the limitation period. The documents are examined by the bank's approved lawyers. Before filing of the law suit, the bank serves notice upon the client concerned. All the deposits obtained as security and or collateral security are appropriated towards the outstanding before filing of the suit. All the assets of the company, to be sued, such as machinery, vehicles, and shares in the custody of the bank is disposed of and the sale proceeds are appropriated towards the outstanding in the account before filing the case for the recovery of the residual amount.
Only lawyer on the bank's panel files the suit. Before filing of the suit, information regarding movable and immovable assets of the borrower and the guarantor is ascertained and steps are taken for attachment of these properties before the court delivers its judgment. The bank branches approach 'Lok Adalats' (people's court) where they exist for speedy disposal of the cases. However, in case the suit is to be compromised in the Lok Adalat, the compromise terms have got to be approved from the Head Office.
With a view to accelerating the recovery process by way of filing suits, the Chairman, Deputy General Manager and Assistant General Manager can be vested with powers for filing suits as under. (Recovery policy of State Bank of India)
Many countries of the world have Banking Ombudsman. "As institutions (Ombudsman) delivering Alternative Dispute Resolution (ADR) services, we could benefit from innovations that have taken place in investigation techniques used by other ADR players such as mediators and conciliators. We know, for example, that mediations are usually concluded in one day, yet this is not at the cost of gathering of facts and weighing of options for resolution of disputes. How can we incorporate the procedures followed by the mediators, in our investigation techniques?
In addition, we could also look at techniques used by the private sector Ombudsman, whose operations, one would imagine, are unbridled by detailed procedures defined under law. Of course, while integrating investigation techniques, procedures and instruments used by our more nimble counterparts, we have to consider the changes in work culture they will bring in tow, but innovate we must. (President of Asian Ombudsman Association- paper at the Second Asian Ombudsman Conference, March 25. 1997, Seoul, Korea)."
The jurisdiction of the Ombudsman extends to maladministration which includes bias, neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude, arbitrariness, action contrary to law, malafide, rudeness, refusal to answer reasonable questions, knowingly giving misleading or inadequate advice, corruption, discrimination, neglecting established rules, procedure and practice and failure to mitigate the effects of rigid adherence to the letters of law where it produces manifestly inequitable treatment. Maladministration always results in injustices which should be redressed by the Ombudsman. (The Role of Ombudsman in the Safeguarding civil rights: Mr Justice Saleem Akhtar, Federal Tax Ombudsman, Pakistan)
Under the ombudsman system, reliable experts listen to public grievances about the administration. They identify the cause of these grievances from a neutral standpoint, and try to resolve associated problems. The Ministry of Public Management, Home Affairs, Posts and Telecommunications, which promote a system of "Administrative Counsellors" to listen to grievances and opinions concerning the administration from the Japanese public, is a member organisation of the Asian Ombudsman Association (AOA).
In determining whether to undertake, continue or discontinue an investigation, the Ombudsman will, subject to the provisions of this Ordinance, act in accordance with his own discretion; and any question whether a complaint is duly made under this Ordinance will be determined by the Ombudsman.
The Banking Ombudsman Scheme, 2006, enables resolution of complaints of bank customers relating to certain services rendered by banks to redress customer complaints against certain deficiency in banking services.
A quasi-judicial body, the Banking Ombudsman has the power to summon both the parties -- the bank and its customer -- to facilitate resolution of complaint through mediation.
In India, the Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complainant and the bank named in the complaint. If the terms of settlement, offered by the bank, are acceptable to the complainant, the Banking Ombudsman passes an order as per the terms of settlement which becomes binding on both the parties.
If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.
For passing an award, the Banking Ombudsman is guided by the documentary evidence placed before him by the parties, the principles of banking law and practices, directions, instructions and guidelines issued by India's central bank, the Reserve Bank of India and such other factors, which in his opinion are necessary in the interest of justice. He will have at the best a marginal role in dispute resolution in case of debt restructuring and/or insolvency issues. His mandate is limited to handling complaints relating to banking malpractices, inordinate delays, corruption, maladministration, etc.
In order to make the institution of Ombudsman effective it requires to be strengthened, particularly in developing countries, gripped by poverty, corruption and maladministration. It is time for the AOA to form a committee to study and recommend the removal of the lacunas and restrictions imposed on the jurisdiction and power of the Ombudsman, which create hurdles to providing relief to people. A model Uniform Ombudsman Law is needed by all the Asian nations.
The Banking Ombudsman Scheme, 2006 of India, facilitates resolution of complaints of bank customers relating to certain services rendered by banks. The Banking Ombudsman is appointed by the central bank of India to redress customer complaints against certain deficiencies in banking service.
The Financial Services Authority (FSA) of the UK set up the Banking Ombudsman. In the UK, the Ombudsman draws specialist knowledge, mediates informally, investigate complaints. Customers get free service. The Ombudsman looks into law, regulations, regulator's rules, relevant codes and good industry practices.
In New Zealand, the Office of the Banking Ombudsman is appointed by the Bankers' Association. The Banking Ombudsman Scheme provides an impartial redress mechanism for customers (personal and business) unable to resolve a dispute with their bank. All members of the Bankers' Association subscribe to the Banking Ombudsman Scheme and the procedure for making a complaint with the Banking Ombudsman is set out in the Code. Under the Code, the Bankers' Association members must first attempt to deal with a customer's complaint internally before referring it to the Banking Ombudsman. The New Zealand Bankers' Association's (NZBA) Code of Banking Practice came into force on December 02, 2002. The bankers go to the Ombudsman to resolve disputes with the customers.
In 1993, the office of the Swiss Banking Ombudsman was established. The sponsor of the Swiss Federal Banking Commission is the Swiss Banking Ombudsman Foundation. The Swiss Banking Ombudsman Foundation is set up by the Swiss Bankers' Association. Its main function is to handle the complaints, usually raised by the customers on an annual basis.
A quasi-judicial authority, the Banking Ombudsman has the power to summon both the parties -- the bank and its customers -- to facilitate resolution of a complaint through mediation.
The Banking Ombudsman endeavours to promote, through conciliation or mediation, a settlement of the complaint by agreement between the complainant and the bank named in the complaint.
The Ombudsman will have at the best a marginal role in dispute resolution in case of debt restructuring and/or insolvency issues. His mandate is limited to handling complaints relating to banking malpractices, inordinate delays, corruption, maladministration, etc. (A Banking Ombudsman Act 1997, Pakistan).
FIN-NET is the Europe-wide network of financial ombudsmen and consumer-complaints organisations - covering the 30 countries in the European Economic Area (EEA) - that is the European Union plus the European Free Trade Area. Its job is to help synchronise communications when a consumer living in an EEA country has a complaint against a financial service's business based in another EEA country.
The Financial Ombudsman Service is a founder member of FIN-NET. And the principal ombudsman, David Thomas, has been with FIN-NET from the start.
He says: One of the principal tasks of the European Union is to develop the internal market - the cross-border trade between different member states. And the European Commission began to take an interest in ombudsman schemes since 1997.
'Of course, that was before the Financial Ombudsman Service came into existence in the UK. At that time, the different areas of financial services had their own, separate, complaints-handling schemes. I was the banking ombudsman then, and I began being invited to meetings in Brussels.
These meetings became more frequent and the remit gradually grew wider as representatives from the insurance and investment complaints-handling organisations started to join us.
The objective of the meetings was partly to learn more about what was going on in Europe. It was also to help the European officials find out more about how the complaints against the financial services were dealt with in the different countries. We were also looking at how consumers could be given greater confidence to buy financial services cross-border. Clearly, if you buy anything from a different country, you want to know what you can do should something go wrong? Out of that arose the notion of FIN-NET - a network of the various financial ombudsmen and consumer-complaints organisations in Europe.
Any scheme or body within Europe that deals with financial dispute-resolution can become a member of FIN-NET provided it meets certain standards. Members agree to co-operate to assist consumers who have cross-border complaints.
The Banking and Financial Services Ombudsman (BFSO - formerly the Australian Banking Industry Ombudsman is a free mediation service resolving disputes between individuals and small business customers and their banks. This service is generally accessible for disputes where the losses claimed are worth less than $150,000. If a customer is overcharged or he or she suffers financial loss due to the bank's faults, he or she can go to the bank's Customer Relations Department to resolve the issue before lodging a complaint with the Ombudsman.
The Ombudsman in Germany is the result of the initiative of the German commercial banks for ensuring fair deal to the customers. The German Ombudsman is an independent, impartial conciliator. After consultation with the consumer organisations, persons were appointed Ombudsmen of the private commercial banks.
Established by the banks and not by the government or an act of parliament, the German Ombudsman attends to customers' complaints.
The Constitution of Bangladesh affirms the inelinable right of the individual to enjoy the protection of the law and to be treated in accordance with law. In particular, it emphasises that no person shall be prevented from, or hindered in, doing what is not prohibited by law and no person shall be compelled to do that which the law does not require him to do.
Now a new trend has developed to appoint ombudsman for departments or services. Different from classical ombudsmen, they have been appointed for revenue, banking, insurance, police, health services, education, army, judiciary or other sectors. In Pakistan, Federal Tax Ombudsman was appointed in 2000 to diagnose, investigate redress and rectify any injustice done to a person due to maladministration by taxation functionaries.
Identification of maladministration without providing relief and implementing the recommendation does not serve the purpose of Ombudsman. In many countries the Ombudsman system has been criticised as a toothless and ineffective organisation as it has no power of enforcement.
But in certain countries, the Ombudsman or Tax ombudsman has the power to enforce his decision. In the USA, Tax Payer Advocate Service helps taxpayers resolve problems with the Internal Revenue Service and recommend changes that will resolve the problems. In Taiwan, the Control Yuan receives, handles and investigates complaints people against malfeasance and dereliction of government agencies. It proposes corrective measures, impeaches public servants who break the law, protects the rights and interests of the people, ensures social justice and promotes a clean and competent governance.
In New Zealand, the Ombudsman is empowered to report on any decision which is unreasonable, unjust, based on mistake, or merely wrong.
In Pakistan, the statute provides that it shall be the duty of the Revenue Division to implement the finding made by the Federal Tax Ombudsman.
Customer Ombudsman of the Valencian Federation of Savings Banks is somewhat different Ombudsman. Responsible for safeguarding the interests of customers in their relations with the region's savings banks, the Valencian Savings Bank Ombudsman is named by the General Council of the Valencian Federation of Savings Banks through a resolution passed by an absolute majority of its members.
Under a legislative decree, the official domicile of the Ombudsman's Office has to be the official domicile of the Valencian Federation of Savings Banks.
Bangladesh needs to study the whole issue to opt for Ombudsman to address number of issues, not suitable to resolve by a court. The issues can be resolved through mutual discussion and mediation by independent quasi-judicial Banker's Ombudsman. The amended Aurtho Rin Adalat Acts for reconciliation meeting or mediation needs to be further amended to simplify the conditionalities for fair mediation. The existing process which goes beyond the concept of traditional 'Shalish' (conciliation) of our society and probably against the basic human rights cannot be effective and efficient. Bangladesh needs Banker's Ombudsman free, fair and unconditional mediation.
The writer, a part time lecturer at Leading University, Dhaka Campus, can be reached at e-mail: shah@banglachemical.com