If your bank messes up, the Malaysian Ombudsman can help you "sue" for free!

Picture this scenario:

You decide to withdraw some cash from your account with Bank A using an ATM belonging to Bank B. The machine swallows your ATM card without dispensing any money, and upon checking online, you find that a deduction has been made from your account.

You call Bank A and ask to be reimbursed for the deducted amount, and they tell you that it's Bank B's responsibility; since it was their ATM. You then contact Bank B but they tell you that it is Bank A’s responsibility to correct the error.

As your problem continues to be in deadlock, you consider taking the matter to a lawyer. This course of resolution may very well be inevitable in your case, but not without you having to debate on whether

(a) Acquiring legal advice would be worth the trouble;

(b) You end up thinking, “Never mind lah, I’d rather write off the money they took from my account than have to spend some more.”

At this point, we should provide the disclaimer that this is a super farfetched hypothetical situation and have the confidence that financial institutions - also including insurance and Takaful - in Malaysia make it a priority to safeguard your interests (ha, banking joke!) and will do their best to accommodate your needs. But if you’ve ever wondered what could be done in an off-chance scenario as such, it is important to know what solutions are available in our country.

Aside from lawyers, there exists an alternative avenue that aims to resolve such a quandary as this for you, and the best part is this: it’s free!

Enter the ombudsman - for free!

The ombudsman, simply put, works as an independent person who's responsible for investigating and resolving disputes between affected parties without having any vested interests.

It's important to note that ombudsman services are intended to resolve disputes rather than taking away your right to have your grievances heard in court - You can still go to court, but more on that later.

As far as Malaysia is concerned, the stipulation under the Financial Services Act 2013 and Islamic Financial Services Act 2013 states that:

" ' Financial ombudsman scheme' means a scheme for the resolution of disputes between an eligible complainant and a financial service provider in respect of financial services or products."

In October 2016, Bank Negara Malaysia appointed Ombudsman for Financial Services (OFS) as the official operator of the financial ombudsman scheme, giving them the authority to resolve financial disputes between financial consumers and financial service providers (FSP).

FSPs include but are not limited to: banks, insurers, takaful providers, insurance brokers, takaful brokers, credit card issuers, financial advisers, and Islamic financial advisers. (The list of FSP under the purview of OFS can be found here.)

OFS provides Malaysian consumers an ‘avenue for effective resolution of complaints arising from products and services’ by FSP who are its members on a free-of-charge basis. Confidentiality for parties involved is preserved (subject to the law) and resolution is typically managed in a prompt manner, i.e. within three to six months from the receipt of lodgement of a dispute.

The full list of conditions for eligibility can be found here, but here are some of the main ones:

1. Parties must not be legally represented.

2. You must have a previously-lodged complaint with the FSP (bank or otherwise) to reach a mutual settlement

3. You must lodge your complaint in writing to OFS within a certain time limit

On top of this, note that if you choose to engage in the services of an ombudsman, you may not lodge a report with the Tribunal for Consumer Claims in accordance with the Financial Services Act 2013, Section 126 (5):

"Where a dispute has been referred to a financial ombudsman scheme by an eligible complainant, the eligible complainant is not entitled to lodge a claim on such dispute with the Tribunal for Consumer Claims..."

[Read more: Get to know the Tribunal for Consumer Claims in Malaysia]

The reason for this is to avoid multiple claims or complaints and to prevent disparity between decisions (ie, If you win one but lose the other).

Here's how the process works

Primarily, once your complaint has been accepted by OFS, a case manager will get in touch with you. The case manager, at that juncture, will encourage dialogues between you and the FSP to identify and discuss the outstanding issues with the goal of reaching an amicable settlement. If the circumstances necessitate it, the case manager will initiate an investigative process where:

• You will be asked for documents to support your complaint. Therefore, it is important for you to keep all documents from the FSP that are relevant to your dispute (such as policies, agreements, statements, etc.).
• You may be requested to attend interviews or meetings with the case manager via phone or in person; this allows the case manager to learn more about your case from your perspective.

Following this, you may be requested to participate in mediation, conciliation or negotiation with the other party. If both parties are not able to settle the complaint amicably, the case manager will proceed make an assessment within 30 days, by taking into account the parties’ documents, interviews and/or submissions. The case manager will then make a recommendation on how the dispute should be resolved. Should both parties (i.e. you and the FSP) accept the recommendation, the terms of the settlement will then be put in writing, namely a Settlement Agreement, and are to be carried out by both parties.

Image from MaxPixel

It should be noted that the recommendation of the case manager is not binding on you or the FSP. If either party does not agree with the recommendation, the complaint is further escalated to the ombudsman for further judgement, during which you can expect the following:

• The ombudsman may require (additional) information and/or documents from you.
• You may be required to attend a hearing before the ombudsman or the matter is decided on evidence and submission before the ombudsman.
• The ombudsman will decide the matter based on the merits of the case.
• Upon the ombudsman reaching a decision on the matter, you may choose to accept or reject the ombudsman’s adjudication; neither party can appeal against the decision of the ombudsman.
• You will have 30 days to accept the ombudsman’s decision, and upon acceptance, the decision will bind both parties (i.e. you and the FPS).
• The ombudsman will issue an award (in writing) and the FSP must, within 14 days, comply with granting the award to you.

If you’re not happy with the decision, you CAN still go to court!

Should the secondary adjudication process fail to meet your satisfaction, you remain entitled to pursue your rights in court. Do, however, seek legal advice prior to doing so.

If you wish to engage the services provided by OFS, please visit http://ofs.org.my or call at +60322722811.