About the scheme
Sri Lanka has seen a landmark achievement
as part of the Financial Sector Reform package initiated by
the Hon. Prime Minister Mr. Ranil Wickramasinghe since April
2002. This is Financial Ombudsman Scheme which commenced operation
on 1st of December 2003.
With the concurrence of the Central Bank and
as part of the Financial Sector Reforms, a voluntary scheme
entitled “The Financial Ombudsman, Sri Lanka” has
been established by the Banking industry, the registered Finance
Companies, the Primary Dealers and Leasing Companies that are
supervised by the Central Bank. The Scheme will be co-ordinated
by a company incorporated by the above mentioned financial institutions
and called The Financial Ombudsman Sri Lanka (Guarantee) Ltd.
The objective of the Ombudsman scheme is the
satisfactory settlement and resolution of complaints/disputes
by customers of banks and other financial institutions covered
by the Scheme, with power to make monetary awards binding on
the participating financial institutions.
Prior to the Financial Ombudsman Scheme coming
into operation, each participating Financial Institution has
established and nominated in each of their Institutions a senior
and experienced officer designated as the “Complaints
Settlement Officer” or “Complaints Resolution Officer”
(or similar name). Prior to any complaint being submitted to
the Ombudsman, the complaint will be examined by such officer
and only in the absence of remedial action satisfactory to the
customer or rejection of the complaint will the Ombudsman entertain/examine
The method by which complaints can be made
to the Ombudsman, and the procedure
for settlement of disputes etc., has been publicized and is
available in this website. To learn more about how to apply
As part and parcel of this Ombudsman scheme
there will also be a Banking Code of Conduct which is now operational
in many other countries though new to Sri Lanka. There will
also be an Electronic Funds, Transfer (EFT) Code of Conduct
for Credit Cards and ATM Transfers.
Originally, the Ombudsman scheme was to have
been restricted to the Banking Industry to Commercial and Specialized
banks. However, the attractiveness and usefulness of the scheme
as a voluntary dispute resolution mechanism was soon appreciated
by other financial institutions. The Finance Companies registered
with the Central Bank decided to join. So did the Leasing Companies
and the licensed Primary Dealers. Thus the name was soon changed
from the 'Banking Ombudsman' to the 'Financial Ombudsman'. Only
Financial Institutions, that are licensed and supervised by
the Central Bank can be members of the scheme. The government
permitted the term “Sri Lanka” to be associated
with the Scheme.
The proof of the pudding is in the eating.
So, no doubt the success of this new scheme will depend primarily
on the choice and integrity of the Ombudsman and the commitment
of the participating financial institutions.
Under the Rules of Appointment, the Ombudsman
has to be a person of either gender of high repute with experience
in Banking and Financial Services. The
Ombudsman is selected by a panel of representatives from
the Central Bank, the Securities Exchange Commission, the Institute
of Chartered Accountants, the Bar Association, the Organisation
of Professional Associations and a representative of the participating
banks and other financial institutions.
The selection of the Financial Ombudsman is
restricted to one of the following persons:
A retired Judge of the Supreme
Court/Court of Appeal/High Court/District Court of Sri Lanka.
- A retired Public Administrator of the rank of a Ministry Secretary.
- A non-active Senior Professional Accountant.
- A nominee of the Federation of Chambers of Sri Lanka holding
a position of repute in commercial activities.
- A nominee of the Organization of Professional Associations,
holding a position of repute in a Professional Body.
- A Senior retired Central Banker above the rank of a Director.
- A retired Senior Banker who had several years of Banking
experience and professional qualifications in Banking.
Scope of the Ombudsman
Initially, any customer of a Bank or a customer
of any other participating financial institution can file a complaint
with the Ombudsman on any of the following grounds.
- Non-payment/inordinate delay in payment or collection of cheques,
drafts, bills, etc.
- Non-issue of drafts to customers and others.
- Non-adherence to prescribed working hours.
- Failure to honour Guarantee/Letter of Credit commitments by
- Claims in respect of unauthorized or fraudulent withdrawals
from deposit accounts, current accounts, savings accounts.
- Fraudulent encashment of a cheque/bank draft.
- Complaints by customers pertaining to the operation of any
customer accounts maintained with the Financial Institution.
- Complaints from export customers on the mis-handling of Export
Bills, Collection of Bills and delays in receipt of export proceeds.
- Complaints from non-residents having accounts in Sri Lanka
in relation to their remittances to Sri Lanka and operations
in their accounts.
- Complaints relating to the violation of directives of the
Central Bank of Sri Lanka in relation to Financial Services.
- Complaints in respect of charges/fees levied.
- The Financial Ombudsman may also deal with any such other
relevant matters as may be specified by the Central Bank from
time to time.
Before the Financial Ombudsman Scheme comes
into operation, each Bank and Financial Institution covered by
the Scheme has established and nominated in each of their Institution
a senior and experienced officer designated as the “Complaints
Settlement Officer” or “Complaints Resolution Officer”
(or similar name). Prior to any complaint being submitted to the
Ombudsman, the complaint will be examined by such officer and
only in the absence of remedial action satisfactory to the customer
will the Ombudsman entertain/examine any complaint.
While the complaint to the Ombudsman may be
drafted by a Lawyer, no Lawyers can appear before the Ombudsman.
The Ombudsman will be supported by a competent full time staff.
The Ombudsman will decide by rules of best practice and banking
law and Codes of Conduct and what is fair and just and will not
be bound to observe any legal rules of evidence etc. The Ombudsman’s
decision is binding on the banks or the other participating financial
institutions but not on the complainant who can take it further
to a Court of Law. However, in such an event, the Ombudsman’s
decision can be brought to the attention of the judge.
In the first year, all the participating members
will share the cost of operating the scheme equally but thereafter
it is expected that the cost will be borne in proportion to the
number of complaints received. In other words, the financial institutions
getting largest number of complaints will have to pay very much
more than the others. The Ombudsman’s annual report will
reveal “the warts and all” of the institutions that
attract more customer complaints.
The Sri Lankan scheme is based fundamentally
on schemes successfully operating in other countries like India,
Zealand. Those schemes are running well and it is hoped that
the scheme in Sri Lanka will also be a successful scheme.
Ombudsman's Term of Office
The Ombudsman's term of office will be for a
period of 2 years with eligibility for re-appointment. The Ombudsman's
office is located in Colombo and supported by a competent