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FMB - classic case of wolf in sheep's clothing

Many consumers who have lodged banking complaints with the Financial Mediation Bureau (FMB) have voiced their disappointment with it.

The FMB was launched in 2005 to mediate problems between consumers and financial institutions like banks and insurance companies.

For each complaint, a mediator is assigned to oversee the case.

According to complainants , when a meeting is arranged by the FMB, both parties will relate their side of the event. The bank will make an offer of how much the complainant has to pay to settle the matter.

The mediator will then ask the complainant whether he accepts the offer. The hesitant complainant is then asked to think over and a few weeks later he will receive a call from the FMB asking him whether he accepts the offer.

This we are told is the extent of the role of the mediator in settling their complaints on disputed credit card transactions. Complainants had expected the mediator to do more than just arrange a meeting between two parties.

They felt that the mediator should have asked the banks why they accepted sales slips from merchants when the signatures were obviously not that of the cardholders and why their security systems were not quickly alerted by the unusual transactions which were outside cardholders’ normal spending patterns?

Some felt that the mediator was too eager for them to accept the bank’s offer.

A mediator’s role is not only to find a settlement to a dispute but also to ensure that the settlement is fair to both parties.

Complainants claimed that when they raised the issue about the maximum RM250 liability for disputed card transaction, they were quickly told by the mediator that it does not apply to their case.

According to Bank Negara’s Credit Guideline (which is meant to be followed by all banks) if the cardholder is not involved in the fraudulent transactions and has reported the loss of the card as soon as reasonably practicable, then he should not have to pay more than RM250.

The guideline also says that if the bank wants to charge the card holder more than RM250 than the burden of proof is on the bank to show that the card holder acted fraudulently or did not report the loss of the card as soon as reasonably practicable.

On the other hand the mediator readily accepts the credit card agreement which states that all transactions carried out using the card is deemed to be carried out by the cardholder, until the loss is reported to the bank.

As the FMB has lost credibility with consumers, it should be scrapped. It its place a Financial Ombudsman Service should be set up.

The Ombudsman, an independent official who investigates complaints from the public will have greater credibility as he would have no ties with banks or insurance companies.

As it is, the mediators of the FMB are chosen by the FMB’s board of directors where out of the none directors, four are from the banking and insurance industry.

In turn, the board of directors are themselves appointed by FMB members who are all from the banking and insurance industry.

The writer is president, Consumers Association of Penang.

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