Central Bank Governor says FSO not powerful enough

The Office of the Banking Services Ombudsman was established in May 2003 by the Central Bank of Trinidad and Tobago in conjunction with the local commercial banks. The office was set up to investigate complaints from individuals and small businesses in respect of financial services provided by the banks and their subsidiary licensed financial institutions.

In May 2005, the Office was expanded to include the handling of complaints from the participating insurance companies. As a result, the Office was renamed the Office of the Financial Services Ombudsman (FSO). The current FSO is Suzanne Roach.

In June, the FSO opened an office in Tobago, located at the Caribana Building, Bacolet Street, Scarborough. It is open every second and fourth Wednesday of the month.

According to Central Bank Governor Jwala Rambarran, the FSO has received 2,500 complaints over the last ten years. However he called for more powers for the FSO, which he says has a very narrow remit of application.

“It’s not powerful enough,” the Governor said. “The FSO is essentially a voluntary arrangement between banks and the Central Bank and also between the insurance companies. So the terms of reference are actually very narrow and that is why our intention is to make the office a lot more

independent, a lot more accountable and more resourced where we could treat with a wider range of issues that face consumers in the financial services industry.”

Rambarran stated previously announced plans to widen the scope of the FSO remain in train.

“That is still on the cards,” the Central Bank Governor said. “At the moment we are working through the arrangement with the banks and insurance companies. There is also an issue around what is called the Motor Vehicle Accident Fund which deals with treating third party motor vehicle accidents of those who are not insured. And the insurance industy is actually asking for the FSO to be the agency to manage that particular fund. So there are a number of issues that we are looking to bring to the fore before we look at expansion.”

The Governor was speaking with reporters after addressing a conference of an organisation known as the International Network of Financial Services Ombudsman Schemes, held at the Hyatt Regency, Wrightson Road, Port-of-Spain. In an address to the participants, he underlined the importance of the consumer and of addressing consumer complaints.

“Consumers are charged at every transaction that occurs on the planet,” the Governor noted. “The consumer is a depositor, facility holder, saver and borrower (and) is the central actor in the financial marketplace.” Yet, he said, the voices of consumers are seldom heard.

The Governor continued, “While I do agree consumers have a responsibility to learn and to understand the contract they have entered in, financial institutions have an even greater responsibility to protect the very people from whom they are trying to make money by ensuring their customers fully understand terms and conditions.”

Rambarran said the global financial crisis of 2007 pushed consumer protection to the forefront.

“Today, financial consumer protection has jumped to the front burner on the agendas of many Central Banks and governors,” he said.. “Countries are intensifying efforts to restore trust in financial markets, protect consumers from improper conduct and ensure access to fair, transparent and competitive financial market places. We the policymakers must ensure that we close the gap in financial consumer protection.”

To the stakeholders at the event, the Governor continued, “As unbiased and fair investigators of consumer complaints, you all occupy a unique place. You are literally the only hope for consumers who have issues with their banks, insurance companies or other financial service providers. You are seen as credible, and impartial. Ironically, because of these very admirable qualities, the Financial Ombundsman seems to be a mere spectator. You stand far away from consumers. You do not stand up for consumers.” He called for more active advocacy.

“You have a responsibility to help consumers stand up and speak for themselves. Listen to the voices of consumers,” Rambarran said.