Annual Report 2 0 15

ANNUAL REPORT 2 0 15 Address of Financial System Mediator ANNUAL REPORT 2 0 15 Address of Financial System Mediator TABLE OF CONTENTS 4 Address of Chairman of the Board 5 Address of Financial System Mediator 6 The Office of Financial System Mediator 10 Activities in 2015 18 Activities for 2016 20 Statistics of complaints and claims 40 Financial Statement and Audit Opinion 48 Overview of Customary Business Practice; Case studies 62 Questions and Answers 66 Acknowledgements 68 The List of Organizations Which Did Not Sign the Covenant Address of Chairman of the Board the FSM Office’s experience today is considered -ex admitted to be examined has increased this year by emplary in the international arena. Pleasant and nearly 13.5% compared to the relevant figure report- praiseworthy is the fact that the Office of FSM has ed in the previous year. The share of claims resolved been entrusted with the honor to organizing the in favor of the client amounts to 77.79%, and out of INFO 2016, an annual conference organized by the In- this 56.32% of cases were resolved through media- ternational Network Financial Ombudsman Schemes. tion, rather than Compulsory decision. In conclusion, I would like to thank the Mediator The increase in the number of claims is largely and all the staff of the Office for professionalism in explained by an important aspect of the activities performing their everyday duties. I believe that per- of the Mediator – the program for financial educa- sistent and determined work is one sure way to ac- tion of consumers. The program is designed in such complish the missions of the Office of FSM. a way as to engage more citizens year after year in various seminars and meetings organized by the Of- fice of FSM. I would like to emphasize the achievements of the Office of FSM in the international arena. In 2015 too, the Mediator received invitation to participate in many international conferences at which the experience of Armenia in financial dispute resolution and consumer education was presented. In Septem- ber 18-21, 2016 the Office of FSM will have the honor of hosting in capital Yerevan the INFO 2016 confer- ADDRESS OF CHAIRMAN ADDRESS OF FINANCIAL ence, an annual gathering of financial ombudsmen OF THE BOARD SYSTEM MEDIATOR from different parts of the world. In conclusion, let me thank all our customers for Dear Reader, Dear reader, their trust and all our partners and financial institutions for efficient cooperation. We will continue to As we sum up the results of 2015 we can state We are pleased to present this report of the Of- walk confidently towards the achievement of our vi- 4 the year under review was marked by new achieve- fice of Financial System Mediator for 2015. For seven sion to the benefit and welfare of our country. 5 ments of the Mediator’s office contributing to en- years our Office has been active in the financial -sys hancement of the Mediator’s reputation both in Ar- tem of Armenia, and the results which we have to- menia and in the international arena. day are really encouraging but also obliging. Since In 2015 too, the Office of FSM saw an increased the inception of the Office of FSM, we set a goal number of complaints and of the claims resolved in before us to not only be a trustworthy and reliable favor of the client. This has been largely attributable dispute resolution body in financial market, but also to effective cooperation with financial institutions to contribute with our daily hard work to the en- and partnership based on mutual trust. The Office hancement of financial literacy of consumers and of FSM continued successful implementation of the increasing financial inclusion in our country. After all, program for financial education of consumers in the an educated and informed consumer is the one who year under review by expanding the program’s ge- will be able to defend his or her rights, and only a ography to include a great number of high schools better knowledge of the laws will give a person firm in capital Yerevan, regions of Armenia and Republic foundation to develop economically and socially. of Artsakh. Thankfully, large-scale projects and vig- The outcome of the policy we adopted is observ- orous elucidatory activities over these years have Sincerely, able every day. This is primarily reflected in the num- enhanced the people’s perception of the functions Armenak Darbinyan ber of customers who apply to us and a growing Yours truly, of the Office of FSM as well as their role and impor- share of cases which were resolved in favor clients. Piruz Sargsyan tance in defending the rights of consumers of finan- Board Member of the CBA, In 2015, the Office of FSM received 3263 complaints cial services. Chairman of Board of Trustees of the about financial services, of which 1448 were accept- Financial System Now, seven years of fruitful activity on the track, Office of FSM ed for examination. Note that the figure of claims Mediator Address of Chairman of the Board Address of Financial System Mediator The Office of Financial System Mediator (FSM) GOVERNANCE OF THE OFFICE OF FSM is a foundation with independent management sys- According to the Republic of Armenia Law on Fi- tem. Its founder is the Central Bank of the Republic nancial System Mediator, bodies of management of of Armenia. The Office of FSM is called to settle out the Office of FSM are: any property disputes that arise between consumers • Board of Trustees, and as natural person and financial organizations. The • Manager of the Office, i.e. the Mediator. services of FSM are free of charge; the process of review of complaint is explicit, fast and transparent. According to the Republic of Armenia Law on Fi- The Office of FSM was established pursuant to nancial System Mediator, the Board of Trustees of the Republic of Armenia Law on Financial System the Office of FSM consists of 7 members, and they Mediator, passed on June 17, 2008. The Office of are appointed as follows: FSM started professional activity from January 24, • one member by the Government of the 2009. According to the said law, the Financial Sys- Republic of Armenia, tem Mediator is appointed by the Board of Trustees • one member by the Board of the Central Bank of the Office of FSM. On the first meeting on De- of the Republic of Armenia, cember 22, 2008 the Board of Trustees appointed • one member by organizations that advocate Piruz Sargsyan, a lawyer by profession, as Mediator. protection of consumer rights, and In 2012, Ms. Sargsyan was reappointed by the Board. • four members by unions of organizations. THE OFFICE OF FSM The Board of Trustees of the Office of FSM is PERFORMS IN PURSUIT OF THE called to approve internal policies and procedures FOLLOWING OBJECTIVES: of the Office, hear the Financial System Mediator • Protection of consumer rights and interests in reports, control the status of implementation of the financial market; the decisions it has made, oversee day-to-day ac- • Fast, effective and free of charge review and tivities of the Office and its financial and economic handling of claims of clients; performance, approve the budget of the Office, any • Enhancement of the public confidence in the changes made thereto; oversee the performance 6 financial sector. against the budget, approve annual financial ac- 7 counts and take on other functions as required by CORE VALUES OF THE OFFICE OF FSM: the law. According to the law, the Board of Trustees Effectiveness, competence and openness are shall not interfere with the professional activities of very important pillars which determine how well the the FSM. Office of FSM functions and how much public trust According to the Republic of Armenia Law on Fi- it has earned so far. The following are core values nancial System Mediator, the FSM shall be required which underlie day-to-day activities of the Office: to have higher education, firm authority and at least • Impartiality in case review; five years’ work experience. The FSM shall not be a • Equality or equal rights for the parties; person who has worked in any financial organiza- • Caring attitude towards the customers; tion in the last three years. The FSM shall not: i) be • Priority to achieving reconciliation of the parties; engaged in entrepreneurial activity, ii) be a member • Operational effectiveness; of management at a party, iii) hold a position in cen- • Transparency and openness; tral or local governments, commercial undertakings, • Partnership and confidentiality; iv) perform other paid work except for scientific, • Professionalism and teamwork; pedagogical and creative activities; the FSM must • International cooperation and innovative refrain from any actions that cast doubts over their solutions. independence and impartiality. The Office of Financial System Mediator The Office of Financial System Mediator The Office of FSM has an audit function. The auditor is appointed by the Board and reports to THE STRUCTURE the Board direct. The auditor takes on a function which involves independent and impartial investigation and evaluation of the operations of the Office through checkups/examinations. THE OFFICE OF FSM HAS TWO PILLARS WHICH MAKE SURE THE OFFICE OPERATES FLUENTLY. THESE ARE: • Support Group which is responsible for admin- istrative tasks to make sure day-to-day activities of the Office of FSM are uninterrupted; and • Case Handling and Investigating Group which makes sure the Office performs its professional -du ties as prescribed by the law. This group, in turn, consists of: ◉ specialists who accept claims, or otherwise, the front office, which receive the visits of clients and provide primary consulting, ◉ specialists who investigate claims, or otherwise, the back office, with the main function of claim investigation, explanation/clarification, legal attendance of the Office, international cooperation, and 8 ◉ specialists supporting case investigators are primarily responsible for helping with claim investigation, making visits to schools and getting involved in activities related to the consumer education program.

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