Coverage and procedure

Principle: The scheme is effective by having appropriate and comprehensive terms of reference and periodic independent reviews of its performance.

Purpose: To promote customer confidence in the scheme and ensure that the scheme fulfills its role.

• The coverage of a financial ombudsman includes the number of ombudsmen, which businesses are covered; and which consumers are eligible to complain including complaint handling by financial services providers business, and inquiry and complaint handling by the financial ombudsman.

The ombudsman should also have a published procedure that is clear, fair, effective, prompt and economical. Essential questions asked here include:

• One financial ombudsman or an ombudsman for each sector? Whether it is necessary to create a consensus amongst all those involved? It may be easier to start by creating an ombudsman for a particular sector – such as banking, especially where the traditional boundaries between banking, insurance, and investment are becoming increasingly blurred in many countries, with for example – banks selling insurance and investments alongside its products and services.
• The Bank of Botswana’s proposal to establish an all-encompassing financial services ombudsman is also acceptable but however, this might take a long time to be realized as the law has to be promulgated first. There is a growing trend towards bringing the sectors together in a single financial ombudsman, for reasons of economies of scale and flexibility, etc. The existing ombudsman office arrangement may proceed such that once the ‘new ombudsman’ is born then the transition would be smooth.
• An ombudsman with partial coverage is better than no ombudsman at all. But even if the ombudsman only covers a single sector such as for example banking or insurance, it is helpful if all the financial businesses in that sector are covered by one ombudsman.
• Which complainants are covered? Must be a customer of the bank? Cover prospective customers, and deal with complaints on wrongful refusal to provide a service. As an ombudsman is an apex complaints mechanism, financial services providers should have clear processes and time limits should have good facilities and sufficient human capital to handle consumer issues.