Banks wary of Ombudsman’s objectivity

Members of the banking sector yesterday expressed concerns about the “fairness and objectivity” of the mediation process to be undertaken by the recently established Office of the Banking Services Ombudsman (BSO).

One representative of RBTT Bank expressed his belief that the award stage of the mediation process placed immense power and authority in the hands of the BSO. This stage, the final in the three-stage process, allows for the office to recommend monetary compensation in an amount not greater than $500,000 for customers as a result of any direct loss or damage suffered as a result of acts or omissions of the commercial bank. Responding to this sentiment, newly appointed Banking Services Ombudsman, Judy Chang, noted that the participating banks had all agreed to impose this power on the BSO. Participating banks are Citibank, First Citizens Bank Limited (FCB), Intercommercial Bank, RBTT Bank, Republic Bank and Scotiabank. However, she stated that the best avenue to prevent the mediation process from reaching this final stage would be to ensure that there are no unsatisfied customers and thus no complaints.

Chang was speaking at a seminar organised by the Institute of Banking and Finance (IBF) to educate the public on the role of the Office of the Banking Services Ombudsman. The seminar was held at the Chamber of Industry and Commerce in Westmoorings. CEO of First Citizens Bank and Vice President of the IBF, Larry Howai, further explained that the Institute had every confidence that the BSO would be an “impartial arbiter.”  This, he said, factored greatly in the decision to place such authority in the hands of the Ombudsman. “Once the BSO has made a decision,” he stated, “the banks will comply.” “There will be some cost to the banks, yes, but this will be more than justified by the greater level of service which will come from the banks as a result,” he added. Chang expressed her belief that the BSO would lend credibility to the financial services sector by providing greater transparency, greater consumer confidence and satisfaction, as well as prompt and independent resolution of problems.

While the BSO can consider complaints about a wide range of products and services offered by commercial banks and their subsidiary licensed financial institutions, including deposit accounts, loan accounts and card services among others, there are limitations. Chang explained that complaints must be about an act or omission that occurred after January 1, 2003 and they must not presently be before the courts. Additionally, complaints must not be related to the bank’s general interest rate policies, risk policies, credit decisions or its pricing of products and services. “The Office of the BSO,” she asserted, “is not a public watchdog, a consumer rights advocate, a standards setting body or a regulatory body.” Instead, Chang elaborated, it provided another avenue for aggrieved persons to seek redress to their complaints and to resolve them through a mediation process rather than to resort to a court of law where the process can be lengthy and costly.