Interview of Armenian Financial System Ombudswoman Piruz Sargsian to Mediamax Agency and Banks.am portal

- Recently, the Union of Banks of Armenia (UBA) put forward an initiative to establish the institute of Financial Arbitration in Armenia. We would like to hear your opinion concerning this.

- I welcome this initiative both as a specialist and as the Financial Ombudswoman, since in the world practice Financial Arbitration is also the institute for alternative extrajudicial solution of disputes. As to our interrelations with this institute purely from the legal point of view, and to be more exact, in terms of analysis of both laws, I should note that these laws are concordant and supplement each other.

Soon our meeting with the newly-appointed Chairman of Financial Arbitration will take place. During the meeting the position of our organization will be presented concerning protection of consumer rights. According to me, the concept should be built in a way that the customer always has the chance to choose between the Financial System Ombudsman’s Office and Financial Arbitration.

I believe that financial organizations should not oblige customers to turn to the services of Financial Arbitration. This is not profitable for consumers of financial services, especially the ones having minor financial complaints, since services of that organization are paid and the procedure of complaint consideration takes longer. In particular, it will be more reasonable for property disputes of up to 10mln AMD to be considered by us and the ones on larger sums to be considered depending on the customer’s decision whether to turn to court or to Financial Arbitration.

- It is known that the institute of Financial Ombudsman is most developed in Great Britain. Has the Armenian side used the British practice?

- Indeed, the institute of Financial Ombudsman in Great Britain is the most developed one, which has fully implemented the corresponding directives of the European Union on alternative solution of disputes in the financial system. We have visited Great Britain twice, examined their structure, work procedure, etc.

In the process of establishing our Office, of course, we used the British practice, but given its adaptation to the Armenian legal field. Great Britain is a country of traditions and there are traditional canons in effect there. Let’s say, the Ombudsman can be guided by own legal awareness. For instance, the Ombudsman can make a decision also on compensating for the moral damage of the applicant.

According to the Armenian legislation, the Ombudsman is guided not only by normative-legal acts, but also by certain business traditions. Let’s imagine a situation, when while considering a particular issue, the Ombudsman comes to a conclusion that the given dispute is not regulated by the law. In this case we turn to particular financial organizations in order to find out the behavior norms, rules of business ethics and establishment of business traditions.

I should stress that countries, which do not enter the European Union, also strive to follow the standards, established in European directives. Armenia also follows those standards and this is proved by assessments of our European colleagues.

- Can you present statistics of the complaints, received by the Office, related to the branch network of commercial banks of the country? Are there positive shifts in this direction?

- Our statistics is carried out as to the type of financial organizations and is classified as to motives of complaints we receive. We do not carry out individual statistics as to the branch network. But in any case, the majority of complaints are related to commercial banks.

From the beginning of the Office’s activity, we have received approximately 750 complaints, the majority of which is related to the banking system. According to approximate estimations, 50% of them touch upon the activity of head offices and the branch network of banks.

Today we observe growth in the number of complaints we receive, and this is conditioned by increase of the level of population awareness.

- Do you expect a transition to the so-called “intensified order” of operation in connection with the upcoming introduction of compulsory car crediting in Armenia?

- In connection with implementation of compulsory car crediting, two meetings were organized this year: the first one was with experts of the Central Bank and the second was in the format of a roundtable, which took place recently with participation of heads of Armenian insurance companies.

Of course, with increase in the volumes of financial mediation, we expect increase of the number of complaints. Today we are ready for the expected growth in the volume of works. But if we feel that the resources we have are not sufficient, we will turn to the Council of the Organization with the suggestion to revise the structures of the Office.

- Credit Organization Association of Armenia (COAA) is for establishing equal conditions with banks as to work with your Office. In particular, they put forward the demand to have their own representative in the Financial Ombudsman’s Council, as well as make the volume of payments equal: today, the fee for banks is established at the volume of 0.01% of assets, and for credit organizations this index makes 0.07%. What do you think about this?

- According to the current legislation, in order to participate in the Financial Ombudsman’s Council, a public organization should have at least 5 years’ history of activity and COAA has been functioning for 2 years. The role of this organization is by no means underestimated, nevertheless, I believe that the game rules should be the same for all and should meet the requirements of the law.

Concerning the volume of payments, there is simple arithmetic here: their size is defined basing on the volume of assets. You will agree that the volumes of assets in banks exceed a few times the analogous indices of credit organization. So, the established rates are quite logical.

- You had plans on holding seminars in the region on increasing awareness of citizens on the financial market. How do the matters stand concerning this?

- We are consistent as to organizing and holding those seminars. They are held both for employees of branch networks of financial organizations and for customers. In organizing seminars, we turn to regional TV companies for support. They inform potential customers on seminars beforehand. The next seminar will take place in Sisian.

- Armenia is the only country in CIS, where the Office of the Financial Ombudsman is functioning. How interesting is your experience for representatives of the post-Soviet area?

- Indeed, Armenia is the only country, the Financial Ombudsman’s institute of which covers the entire financial system of the country. For instance, the similar organization, operating in Kazakhstan, covers only the sphere of compulsory insurance and just recently it started covering the entire insurance market.

Lately I was giving an interview to the “National Banking Magazine” of the Russian Union of Banks and it turned out that Russia is very interested in introducing this institute and studying the Armenian practice.

Besides, the Financial Ombudsman of Great Britain, who had recently visited Ukraine, turned to us and informed on the interest of Ukrainian colleagues in the work of the Armenian office. My trip to Kiev is planned for fall. Detailed presentation on Armenia’s work experience in the Financial System Ombudsman’s institute will be made there.