On April 14, 2011, I addressed the public as the Chairperson of the Fiji Commerce Commission (FCC) concerning complaints regarding the financial sector’s excessive charges and fees. I highlighted the critical issue of Substantial Market Power (SMP) within Fiji’s banking sector, which, if not addressed, could hinder the country’s economic growth and obstruct low-income households from enhancing their living standards.
The Commission’s initiative stemmed from grievances voiced by consumers, businesses, potential investors, and the Consumer Council of Fiji. Under the Commerce Commission Decree 2010, the Commission is mandated to regulate the market when there are indications that market conditions do not sufficiently support the goals set forth in the Decree.
In such cases, the Commission is responsible for identifying relevant financial service markets, assessing competition levels, including the impact of intermodal competition, and determining the degree to which a lack of competition may obstruct the Decree’s objectives.
To rectify the issue, the Commission welcomed input from all stakeholders to conduct a Substantial Market Power (SMP) study, aimed at evaluating competition within the market, identifying financial institutions with substantial market power, and taking corrective measures.
On September 5, 2011, the Commission released findings from the SMP study, revealing that three banks dominated the financial services market in Fiji, holding 74.36 percent of total market share in assets, 77.49 percent in loans, and 83.67 percent in deposits. This concentration was found to stifle competition, leading to elevated interest rates and fees, thereby impacting consumers and impeding the growth of small and medium enterprises, as well as low- and middle-income households. The study also identified inadequate channels for consumer complaints.
While the Commission considered appointing a Financial Services Ombudsman, it was reported that the Reserve Bank of Fiji (RBF) would assume this role with a more proactive approach.
Despite these developments, the issue of SMP in the banking sector persists, and consumer complaints remain poorly documented. Consumers have found it challenging to access the RBF’s complaint resolution mechanisms, which are not user-friendly. The recent announcement by Finance Minister Prof. Biman Prasad regarding the appointment of a Financial Services Ombudsman marks a significant step forward, and this bold action deserves recognition.
In this discussion, I will explore how the Financial Services Ombudsman (FSO) can effectively serve the community without becoming another inaccessible entity. The FSO is vital for consumer protection and dispute resolution in financial services, providing an independent forum to address consumer complaints against financial institutions.
For the FSO to succeed, it must be clearly defined in terms of its role and scope. The ombudsman’s functions should include providing fair and transparent dispute resolution processes, offering resources to empower consumers regarding their rights and responsibilities, and making policy recommendations for regulatory improvements in the financial sector.
It is crucial for the FSO to operate independently from the financial services industry and government to build trust and credibility. This necessitates enacting legislation that outlines the ombudsman’s authority, ensuring autonomy from external influences and granting the ability to make binding decisions.
Additionally, an advisory board comprising stakeholders like the Consumer Council of Fiji, the Fiji Chamber of Commerce, and other experts should be constituted to lend credibility and diverse insights.
For the FSO to be effective, its processes must be accessible and straightforward for consumers. The complaint submission procedures should cater to those with varying levels of education by simplifying the process and eliminating excessive documentation requirements. The complaint forms should be available in the main languages spoken in Fiji, and the FSO offices should be located in major towns for easier access.
Moreover, the staff at the FSO must be well-trained and professional in dispute resolution methods such as mediation and arbitration. This would require hiring staff with expertise in financial laws and regulations while also involving external experts for training.
Transparency and accountability are critical for the FSO’s success. Implementing a data-driven system to monitor complaints will help identify trends and improve public perception. Regular reports on complaints should be made available, and feedback channels should be established to facilitate continuous improvements.
Finally, strong collaboration with regulatory bodies is essential. The FSO should engage with the RBF and the FCCC for data sharing and insights to enhance its effectiveness and conduct public awareness campaigns about consumer rights and the ombudsman’s role.
In conclusion, a robust financial services ombudsman is essential for consumer protection and the integrity of financial markets. By establishing clear roles, ensuring independence, simplifying processes, maintaining professional standards, promoting transparency, and fostering collaboration, the FSO can effectively address consumer complaints and contribute to a stable financial environment. The recent appointment of the FSO by Minister Prof. Biman Prasad is a significant step, but further efforts are needed to ensure its effectiveness, including regular updates on complaints and resolutions to build public confidence.