Dispute resolution - Complaint procedure Sub-chapters: Introduction Steps to be undertaken in a case of dispute Mediation Ombudsman for financial services IntroductionPublic trust of the financial system depends on several important elements (regulation, good business practice, protection against insolvent institutions, etc.); one of the most important is a mechanism for fast and simple dispute resolution between clients and solvent financial institutions. Users of financial institutions sometimes need to resolve disputes related to the institutions' services. Many clients are not informed about ways to resolve a dispute and the relevant institutions they need to contact. Due to the inability or lack of information on how to protect their rights, clients are frequently handicapped and unprotected in business dealings with banks and other financial institutions. In order to solve problems in consumer rights protection, changes and addendums in existing regulations of BiH have recently been introduced - in the RS, the Banking Law was amended with relevant solutions in 2011, and a Law on protection of financial service users is currently in parliamentary procedure. The solutions in both documents are very similar (under assumption that there will be no substantial alterations in the draft Law in FBiH, which is in public review during July 2013); we will refer to these solutions bellow to clarify how users of financial services can protect their rights. Steps to be undertaken in a case of dispute Clients have a right to complain if they consider their rights and interests in business relations with banks or other financial institutions (leasing companies, microcredit institutions etc.) are impaired. In other words, a financial service provider does not respect a signed contract or does not follow general conditions of business or good business practices. As a first step, a client should directly contact an official from the bank or other financial institution about his complaint. Banks are obliged to receive complaints from their clients and have to deal with those complaints. Clients very often can quickly resolve problems through direct contact with bank officials, eliminating the need for further steps. However, if the problem is not resolved through direct conversation, then the client can use further options. The second step is for the client to address the bank in writing and clearly describe the problem. The bank has to reply within 30 days of receiving a written complaint. For better protection of client rights, banks have to keep records about all received written complaints and the resulting settlement as well as share this information with Banking Supervisory Agencies (BSAs). In this way, clients can be sure their complaints will not disappear and BSAs do care how disputes are being settled. The third available step, if a reply is not received within the prescribed timeframe or if the client is not satisfied with bank's reply, the client can write to the Ombudsman of the banking system and provide a short description of the problem, timing, and the circumstances surrounding the issue as well as the bank's reply, if a reply was received. Once notified, the Ombudsman will demand that the bank refer to the complaint and provide its response (within 8 days). If the Ombudsman finds that client protections were violated, the bank will pay a fine. If the Ombudsman concludes that the case is not subject to a fine, the Ombudsman, client, or bank may propose mediation in an attempt to resolve the problem.. The fourth step for the client is to decide whether to ask for meditation or to initiate court proceedings concerning the dispute with the bank. Mediation Mediation is an alternative way of dispute settlement, when parties make a decision without imposition. This procedure has several advantages to a court case, because the process is simpler, more efficient, faster, and without significant bureaucratic formalities. A necessary precondition of mediation is that both parties accept it, since it cannot be (unlike court case) initiated unilaterally. Mediation is based on three important principles: (a) voluntary participation (b) equal position of parties and (c) confidentiality, since declarations during the mediations cannot be used in future processes. It is necessary to have a mediator for mediation process. The mediator is a neutral person, in this case the Ombudsman, who is helping both sides find a solution through a negotiation process. The mediator has to take into account the interests of both sides (client and bank) and help them to find a solution. A request for mediation should be submitted to the Ombudsman in a written form, the services of the Ombudsman are provided without cost to the client. The whole mediation process is documented in official minutes, and if the parties find a solution, then there is a written agreement signed by both parties. Ombudsman for financial services The Institution of Ombudsman for financial services was established to provide professional and unbiased assistance for users of financial services. They are independent from market participants and government, and their services are free. Their main role is to examine and resolve disputes between clients and financial service providers. In this way, they create trust with clients, because they enable them to protect their rights and help them to resolve disputes with financial institutions. Unlike a courts case, the Ombudsman is actively engaged in examining the case and uses its expert knowledge, meaning the client is not responsible for providing all evidence and documents. Experience shows that ombudsman benefits in several ways because: Consumers have greater confidence in financial services when they know that, if anything goes wrong, they will be able to take their dispute to an independent body that will resolve the issue quickly and informally, without the need to pay a lawyer. Financial institutions can cut the cost of resolving disputes and unscrupulous competitors are held to account for unfair behavior. The state can reduce the cost for redresses, but also obtains better information about needed changes to regulation. Clients can only access the ombudsman if they know about the office and where to find it. The Ombudsman should publish details about its power and procedures, as well as the effects of his decisions. All banks are required to assist their clients to contact the Ombudsman. There are 2 ombudsmen for the banking sector and they are located within two banking agencies in two entities (Federation of Bosnia and Herzegovina www.fba.ba and Republika Srpska www.abrs.ba). Clients are not obliged to use Ombudsman services, and may opt for initiation of a court case. But in most cases, Ombudsmen can significantly assist clients in the protection of their rights and avoid lengthy and costly court procedures. It is very useful when ombudsmen publish detailed information about complaints and enquiries they received. In addition, if ombudsmen publish case studies and solutions, clients can learn from other cases about their rights.
