Banks Adopt Dispute Settlement Mechanism

The banking sector growth has brought fresh small and huge claims among stakeholders since its liberalisation some two decades ago in the country.

Over the years, these complaints were either left to be dealt with the main stream courts or with the banks via internal mechanisms – whatever the case, customers, majority of them, seemed to be unsatisfied.

The Bank of Tanzania (BoT), as the sector regulator of 54 financial institutions, realised the need for creating a fair playing field among the stakeholders – consumers and bankers – and established a complaints resolution desk.

BoT Litigation and Investigation Department, Associate Director, Mr Mustafa Ismail, said the desk is a cost effective and efficient mechanism to resolve complaints between banks and their customers.

“The desk intends to resolve complaints (small claims) whose monetary value in respect of both the claim amount and remedy to be awarded does not exceed 15m/-,” Mr Ismail said.

The desk, which is fully funded by the Bank, was established a few weeks ago and receives complaints five days a week from Monday to Friday and its objective is to resolve “banking consumer complaints amicably”.

However, Mr Ismail said, the desk does not receive all claims until the internal mechanisms failed or those which have already failed at the court and the complaint period should not exceed two years.

“Before lodging your complaint with the Desk,” Mr Ismail said, “you are required to exhaust your bank internal complaints resolution mechanism”.

The banking institution is supposed to keep the complainant updated throughout the process. And the desk will resolve your complaint within 21 days from the date of lodging your complaint.

For instance, the desk receives a complaint such as failed attempt to withdraw money from an ATM, which at the end of the day the machine registered that the cash has been withdrawn.

Upon lodging a claim against a respective bank and the institution refused to refund the money giving one reason or another.

The customers then files a complaint with the desk. The banking sector will soon have an ombudsman to hear and investigate consumer complaints instead of resorting to court system.

BoT Deputy Governor Mr Lilla Mkila said during the stakeholders’ workshop held in Dar es Salaam that the establishment of the mechanism is a major step forward in addressing complaints and provision of better services to consumers.

“The operationalisation of the desk is not an end but rather the beginning of the journey towards strengthening legal mechanisms to address complaints from banking consumers,” Mr Mkila said.

The Chair of the Ombudsman Association, South Africa Mr Neville Melville said the complaints management and the role of ombudsman should be taken as an opportunity for the banking sector in an endeavour to provide high quality services.

“The banking sector is growing rapidly not only in Tanzania but also in the globe to scale up competitions, thus having complaints management and ombudsman was of paramount importance,” he said.

Mr Melville said consumers complaining about the products and services continue to do businesses with the provider only if they believe that there are measures geared at resolving the complaints.

According to the guidelines of the desk, each banking institution has put in place a complaint resolution mechanism capable of efficiently and promptly resolving complaints.

In exceptional circumstances, if a banking institution is unable to resolve the complaint within 21 days, it will immediately inform the complainer of its inability.

The bank also has to state reasons for such inability and what measures are being taken to resolve the complaint urgently and in any case not more than 14 days thereafter.

“Resolution of banking consumers’ complaints is free of charge as the desk does not charge any fee whatsoever,” Mr Ismail said.

The complaints are eligible for submission to the desk; so long as it is against a banking institution which is either a member of the Tanzania Bankers Association or regulated by the Bank.

On other hand are ineligible complaints where the complainant has not suffered any financial loss, material inconvenience or distress, which was not first reported to the banking institution concerned and which is vexatious or frivolous or not in good faith.

Once a complaint is filed at the desk, the bank in question will be notified and required to respond to the claim within 10 working days. If the bank failed the desk will send a reminder of 5 working days.

“Where, after the reminder,” Mr Ismail said, “it fails to respond the Desk may conduct its own investigation and determine the matter without the banking institution’s representation”.

The desk will deliver its decision on the matter within 90 days from the date of lodging the complaints. The Desk is not bound by the legal principles of handling complaints such as rules of evidence but adheres to the general principles of natural justice.

The function performed by the Desk is different from that performed by courts. The Desk is enjoined not to have regard to technicality and legal form but resolve complaints using criteria that would not usually be used by courts-for instance whether an explanation for the conduct was not given when it should have been given.

In December, last year, the Tanzania Bankers Association (TBA) members adopted the code of banking practice 2014 that recognises the mandate of the Desk to resolve consumer complaints.

Originally published on DailyNews Tanzania

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