The Financial Ombudsman Sri Lanka


		About the scheme

		Scope of the Ombudsman

		Ombudsman's Term of Office

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 any complaint.

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 click here.

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 Banks.
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, England, Australia and New 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 full-time staff.