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New body to mediate disputes between consumers, financial firms

2012/01/02 21:17:28

Taipei, Jan. 2 (CNA) A nonprofit agency that will arbitrate disputes between consumers and financial institutions was formally launched Monday, centralizing a process currently divided between several different organizations.

The body, called the Financial Ombudsman Institution, will hear disputes between consumers and financial services companies such as banks, brokerage houses, and insurance companies and decide on compensation.

"The institution will not only be a consumer protection body, but will serve as a bridge for communications between consumers and financial institutions and make just and professional rulings on disputes between the two parties," said Chen Yuh-chang, chairman of the Financial Supervisory Commission (FSC), which will finance the new body.

Lin Kuo-chuan, chairman of the new institution, said financial institutions must first sign an agreement to state that they are willing to accept the institution's arbitration before cases related to them can be heard.

To get financial institutions to sign the agreement, Lin said it will publish a list of the companies that are unwilling to cooperate.

"Through transparent information, we will let consumers understand which financial institutions are willing to accept arbitration so that they can feel better protected," Lin said.

Lin said that around 1,000 cases had already been transferred to the institution by groups currently involved in arbitration procedures, such as the Bankers Association of the Republic of China and the Taiwan Insurance Institute.

Most of the disputes involve the purchases of structured notes, Lin said.

He predicted that the institution will handle more disputes related to insurance products than to products sold by banks because of the more complicated nature of insurance policies and claims compensation.

According to the institution, it will follow a three-stage arbitration process, starting with face-to-face intermediation, followed by a written assessment, and concluding with the institution's ruling.

As long as the dispute involves compensation of under NT$1 million in an investment dispute and under NT$100,000 in a non-investment dispute, the financial institutions should "accept the result of arbitration" as final, without any further chance to appeal.

(By Wu Ching-chun and Lilian Wu)