Annual Report, Yerevan, 2011, 117 Pages
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The Office of Financial System Mediator Annual Report, Yerevan, 2011, 117 pages This book presents the Annual Report of the Office of Financial System Mediator of the Republic of Armenia. The book is compiled and published for the Office of Fi- nancial System Mediator and is not for sale. Design by Lilit Harutyunyan | DEEM PRODUCTIONS Yerevan, Armenia Dear reader, This is the second year now that the Office of Finan- cial System Mediator has been functioning in the Republic of Armenia. We have spent much effort to earn more recognition and trust of households and financial organizations. Not only was the second year remarkable with an increased number of complaints lodged but also with projects that the Office launched to educate people on financial products. The Office continues its activities consistent with international developments, and in the period under review we kept focus on the cooperation with our foreign coun- terparts in order to exchange experience and intro- duce best international practice to the Office. The Office remains committed to enhancing partner- ship with financial organizations as it held a number of roundtable discussions, in addition to the confer- ence with an involvement of representatives of finan- cial organizations, to address specific issues and find ways on how these could be overcome. We may state that the Office tracked success in its second year of activities for earning recognition and trust –an increasing amount of clients having come up to the Office even in its passive period of elucidatory activities is quite a case in point. This is very impor- tant in a sense that more complaints are expected to come from citizens hence users of financial services – as a result of introduction of the compulsory insur- ance against civil liability in respect of the use of mo- tor vehicles and the private pension scheme. This is where the Office of Financial System Mediator would come to offer its services in handling complaints and dispute resolutions. 2 I would like to thank all staff members of the Office for their achievements in the previous year and our partners for their professionalism and willingness to a constructive dialog. Truly yours,` Vakhtang Abrahamyan, The CBA Board Member, Chairman of the Board of Trustees of the Office of Financial System Mediator 3 Dear reader, In the previous year when we were summing up the first year of activities, I was certain to announce that the Office of Financial System Mediator had become established, that we had succeeded in creating a body that is able to really protect lawful rights of con- sumers and oftentimes come out as reconciler, per- suader and explainer. For the second year our primary objective was to increase consumer confidence in the Office and even make it stronger. Now, I am proud to say that the Office of Financial System Mediator is summing up its second year of activities with the recognition and awareness problem considerably defeated. Statistical surveys conducted by the Central Bank of Armenia during 2010 prove the above said statement: 99 percent of respondents were aware of the Office of Mediator and 96 percent assured that they would come into the Office if they had problems with the financial organizations whatever. It should be noted that the second year of the Office saw somewhat a lesser amount of citizens with their calls and visits to the Office unrelated to financial organi- zations. People started to understand the very nature and objective of the operations of the Office, and I think this is a noticeable achievement for us. We remained committed to a policy of acting like an intermediary by increasingly offering reconciliation for financial organizations and consumers. Our staff members acted a –defender– to the client and a –part- ner– to the financial organization. As a result, about 70 percent of cases we handled during the previous year were settled in favor of the client and nearly 60 percent of such cases were settled through reconcilia- tion between the parties, with an outcome of agreed Photo by E-productions loss compensation. 4 Pursuing to be prestigious, open and trusted, our Office has set a task to have financially educated clientele which is protected in the financial market. To this effect, in the year under review apart from being an extrajudicial body that settles disputes, we have done much to educate consumers on financial services and products and explained to them which rights and obligations they have. We are planning to launch a large-scale campaign for financial education of people in 2011, with an increased emphasis to be placed on the population living in countryside. This is one of the key strategies of the Office, and we are going to call a number of institutions, whether public or non-public, to help us fulfill this objective. This is something that all of us, the stake- holders, and the financial sector on the whole will benefit from since, experience shows, citizens more aware of their rights and obligations trust more and use more of services and products which financial organizations offer. I believe that this Annual Report will provide enough to demonstrate transparency and open- ness our Office aspires to and allow you to have a more complete understanding of what we have done. Sincerely yours, Piruz Sargsyan, Financial System Mediator 5 The Office of Financial System Mediator The Office of Financial System Mediator is an establishment with an independent man- agement system. The Office has been incorporated as a –foundation–, and its founder and stakeholder is the Central Bank of the Republic of Armenia. The Office of Mediator is called to settle out any non-pecuniary disputes arisen between consumers as natural person and financial organizations. The services of Financial System Mediator are free of charge while the process of review of complaint is explicit, fast and transparent. The Office of Mediator has been established pursuant to the Republic of Armenia Law on Fi- nancial System Mediator, adopted on June 17 2008. Financial System Mediator has launched professional activities since January 24 2009. According to the above said law, Financial System Mediator shall be designated by the Board of Trustees of the Foundation. In the first meeting, which was held on December 22 2008, the Board of Trustees appointed Piruz Sargsyan, a lawyer by profession, in the capacity as Mediator. Scope of activities Financial System Mediator has the following objectives: Protection of consumer rights and interests in the financial field; – Fast, effective and free of charge review and handling of claims of clients; and – Enhancement of population'–s confidence in the financial sector. Management of the Office of Financial System Mediator According to the Law on Financial System Mediator, bodies of management of the Office are: the–– Board of Trustees, and – the Administrator of the Office/Mediator. 7 Further, according to the said law, the Board of Trustees of the Office of Financial System Mediator consists of 7 members, and these members shall be appointed as follows: one– member-by the Republic of Armenia Government; – one member-by the Board of the Central Bank of Armenia; – one member-by organizations that advocate protection of consumer rights; and – four members-by unions of organizations. According to the said law, Financial System Mediator shall be designated by the Board of Trus- tees for a 4-year term. Furthermore, the law sets forth requirements to Financial System Me- diator, whereby Mediator shall have higher education, shall be of good repute and shall have at least 5 years of work experience. Financial System Mediator shall not be a person who has served in any financial organizations during the last three years. The Office has an auditor competence. The supervisor is appointed by, and accountable to, the Board. The function of the auditor is to make an independent and unbiased review and assess- ment of the activity of the Office by carrying out inspection/examination of the activities and operations of the Office. 8 There are two groups in place which make sure that operations of the Office are smooth and functional. These are: Support Group that takes on an administrative function to ensure uninterrupted performance of the Office. The group includes a personnel management specialist, an accountant, a bookkeeper and a driver; Case Handling and Investigating group which makes sure professional activities of the Office are in place; this unit includes: Case Handling Unit or, otherwise, front office, the main function of which is to meet clients and provide primary advice thereto; Claim Investigating Unit or, otherwise, back office, the main function of which is to review claims, provide explicatory service to clientele and provide legal attendance of the Office. 9 Competence of the Board of Trustees Pursuant to the Law, the Board of Trustees of the Office of Financial System Mediator shall have the following competence: approve charter of the Office, and amendments and addenda made thereto based on the vote of at least five members of the Board; the charter shall have a statutory responsibility to determine the procedure of appointment of Mediator; make decisions on Mediator and, where other bodies are set up, make decisions on their appointment and premature termination of their competence; approve internal policies of the Office, including procedures that define code of conduct and ethics of the Board Members, Mediator and staff of the Office; these include cases and procedure