Bank Negara Malaysia (the Bank) is issuing a concept paper on the Financial Ombudsman Scheme (FOS) for public consultation. The concept paper aims to seek feedback from members of the public, industry players and related stakeholders on proposals for the establishment of a FOS to strengthen avenues for financial consumer redress, in line with the recommendation outlined in the Bank’s Financial Sector Blueprint.

Objective

As part of the Bank’s efforts in enhancing dispute resolution arrangements for users of financial services, the Bank has formulated a framework for the establishment and operations of a FOS in Malaysia.  The Financial Services Act 2013 (FSA) and Islamic Financial Services Act 2013 (IFSA) provide for the approval of a FOS for purposes of ensuring an effective and fair handling of complaints and for the resolution of disputes against financial service providers (FSPs).

In this regard, the existing Financial Mediation Bureau (FMB), which is currently operating under a voluntary arrangement, will be transformed into a FOS approved under the FSA and IFSA.  As part of the transformation, the governance and operational arrangements of the FMB will be enhanced in line with international best practices.  The transformed FMB would expand its services and is expected to commence operations in the second half of 2015. The services of the FOS will not be chargeable to users of financial services.

Key recommendations

The concept paper elaborates the following key aspects of the proposed FOS framework:

1. Strengthened governance arrangements addressing the composition of the Board of Directors which shall be independent and provisions for a periodic independent review of the operations of the FOS to be carried out to assess its efficiency and effectiveness;
2. Expanded membership of the FOS with the inclusion of insurance and takaful brokers, as well as financial advisers in addition to the current licensed institutions;  
3. Expansion of the scope of disputes and awards handled by the FOS; and
4. An improved fee structure which better reflects the utilisation of the FOS service.

Consistent with current arrangements adopted for the FMB, the ombudsman’s decision shall continue to be binding on the FSP if accepted by the complainant. Nevertheless, the complainant may reject the ombudsman’s decision and institute legal proceedings if he is dissatisfied with the outcome of the dispute.

Feedback from the public and various stakeholders

Members of the public, industry players and related stakeholders are encouraged to provide written feedback on the concept paper.  The concept paper can be downloaded from the Bank’s website at www.bnm.gov.my.  The deadline for the submission of feedback and comments is by 29 September 2014.  All feedback can be submitted to the address mentioned in the concept paper or via email to [email protected].