Bank Negara issues Exposure Draft on Complaints Handling

Bank Negara Malaysia (“BNM”) is seeking public feedback on its Exposure Draft of the Policy Document on Complaints Handling (“Exposure Draft”) issued on 8 October 2024.
 
The Exposure Draft when issued (“Policy Document”), will supersede the Guidelines on Complaints Handling issued on 17 December 2009 by BNM (BNM/RH/GL 000-4) (“Existing Guidelines”).
 
The Policy Document will apply to two categories of entities regulated by BNM, namely: 
  1. Financial service provider (“FSP”) comprising:
  • a licensed bank;
  • a licensed Islamic bank;
  • a licensed insurer;
  • a licensed takaful operator;
  • a development financial institution prescribed under the Development Financial Institutions Act 2002;
  • an eligible e-money issuer as defined in Appendix I of the Policy Document on Electronic Money; and
  • an approved non-bank credit card issuer with an annual revenue above RM50 million; and 
  1. Approved person (“AP”) comprising:
  • an approved insurance broker;
  • an approved takaful broker;
  • an approved financial adviser;
  • an approved Islamic financial adviser;
  • an approved issuer of a designated payment instrument (other than an eligible e-money issuer and an approved non-bank credit card issuer with an annual revenue above RM50 million);
  • an approved issuer of a designated Islamic payment instrument; and
  • an approved payment system operator. 
Overview
 
The Policy Document seeks to: 
  1. require FSPs to establish fair, effective and transparent complaints handling mechanisms that are responsive to the diverse needs of their consumers; and
  2. promote a culture of accountability by the FSP, its employees and representatives to ensure fair treatment of financial consumers through the provision of effective complaints handling services. 
To address the evolving landscape of financial services, characterised by rapid digitalisation, increasingly complex products and heightened consumer expectations, BNM expects FSPs to establish robust complaints handling procedures that align with their business strategies, organisational structure and consumer base.
 
Roles and responsibilities of board and senior management
 
The board of directors of an FSP is responsible for ensuring complaints are handled fairly, transparently and on a timely basis by: 
  1. overseeing the formulation and effective implementation of the FSP’s internal governance and control framework for complaints handling;
  2. ensuring periodic review on the relevance and appropriateness of the FSP’s internal governance and control framework for complaints handling; and
  3. promoting a sound corporate culture that is responsive and accords due consideration to financial consumers’ best interest when handling complaints. 
The senior management of an FSP is responsible for formulating and implementing an effective internal governance and control framework for handling consumer complaints, including in the following areas: 
  1. development and implementation of a robust policies, procedures and processes to ensure timely and fair responses to complaints received;
  2. allocation of adequate and suitably qualified resources for effective complaints handling;
  3. provision of adequate channels and systems for submission and management of complaints to ensure accessibility and efficient handling of complaints received from consumers;
  4. effective oversight and monitoring mechanisms to detect any material deviations from the FSP’s established internal governance and control framework that warrant prompt resolution; and
  5. timely escalation to the board on any recurring or material deviations from the established internal governance and control framework that have resulted in poor outcomes to consumers. 
The board and senior management are required to ensure that the adequacy and effectiveness of an FSP’s internal governance and control framework are subject to periodic review.
 
Complaints Handling Procedures
 
An FSP Is required to formulate and implement effective and transparent complaints handling policies, procedures and processes for timely and fair handling of financial consumer complaints. At the minimum, an FSP’s complaints handling policies must include the following: 
  1. all complaints received by the FSP through whatsoever channels are to be channelled to its centralised complaints handling platform;
  2. all complaints received are properly assessed to ensure accurate identification of root causes for issues raised by the complaint to ensure fair and timely resolution;
  3. clear criteria or parameters for identification of simple and complex cases;
  4. specific procedures, timelines and governance arrangements for handling of complaints with differing complexities;
  5. adequate and timely notification to financial consumers on the status of the complaints received;
  6. proper communication in writing of the FSP’s final decision, which must include the reasons for reaching such a decision; and
  7. clear and transparent communication on the availability of redress avenues for consumers that are dissatisfied with the FSP’s final decision. 
An FSP must also ensure its complaints handling procedures are well documented and accessible to its relevant staff.
 
Complaints Handling Function
 
An FSP shall ensure its internal capacity and capabilities to support an effective complaints handling function are adequate and correspond to the size and complexity of its business operations, products and services offered, and consumer base.
 
An FSP shall also establish a dedicated single point of contact such as a complaint or customer service function (“complaints handling function”) for referring all consumer complaints received.
 
The FSP must appoint dedicated and suitably qualified staff for its complaints handling function and ensure that such staff receive adequate and continuous training on its complaints handling function and are empowered to act decisively to resolve complaints in a timely and satisfactory manner.
 
Accessibility
 
An FSP is to ensure its complaints handling channels are easily accessible and available to all financial consumers. It must prominently publish key information on its complaints handling access points and procedures at its premises and website. At a minimum, this must include: 
  1. information on specific contact points and channels for lodgement of complaints;
  2. description of the complaints handling process and turnaround time for complaints resolution; and
  3. summary of next steps that a financial consumer may take if the consumer is dissatisfied with the FSP’s final decision. 
A sample flowchart of the complaints handling process is provided in Appendix I of the Policy Document.
 
Any changes to the details of its complaints handling function or channels are to be updated as soon as possible at the FSP’s premises and on its website.
 
Responsiveness
 
The turnaround times provided in the Policy Document for resolution of financial consumers’ complaints are summarised as follows in Appendix II of the Policy Document:
 
Requirement Turnaround Time
(A)  Acknowledgement to financial consumers Within the next working day (“WD”) of receiving the complaint
(B)  Resolution of simple cases Within five WD of receiving the complaint
(C)  Resolution of complex cases No later than 20 WD of receiving the complaint
  • where a complaint identified as a simple case is subsequently determined to be complex
Notify the financial consumer of the change and the reason for such change within five WD of receiving the complaint
  • if the FSP requires relevant or material information or document from a third party
Additional 10 WD from the end of 20 WD, for FSP to continuously follow-up with the third party
  • if the FSP fails to obtain information or document from third party
No later than 30 WD of receiving the complaint, the FSP must inform the financial consumer of the FSP’s decision and of the fact that the decision was made in the absence of the relevant or material information or document from the third party
  • to update financial consumers of the progress of the case
Weekly basis
 
An FSP must also ensure its complaints handling function is subject to independent periodic reviews. Such review may be conducted by an independent function within the FSP such as a compliance function or internal audit function, as well as by the board and senior management of the FSP.
 
Decision and Referral
 
An FSP and an AP are required to communicate its decision immediately to a financial consumer upon completion of its investigation into a complaint. The final decision must be in writing and shall at minimum, include: 
  1. clear and concise explanations, written in plain language, on the basis for its final decision;
  2. appropriate prominence to material information that may impact the consumer’s interests;
  3. a translation of the final decision for consumers who face difficulty in understanding due to language barriers; and
  4. clear and accurate information on the availability of redress avenues in circumstances where the consumer is dissatisfied with its final decision. 
An FSP and an AP shall refer financial consumers to the Ombudsman for Financial Services (“OFS”) as an avenue to seek redress in the following circumstances: 
  1. the consumer is an eligible complainant as defined under the Financial Services Act 2013, Islamic Financial Services Act 2013 or Development Financial Institutions Act 2002, as the case may be, and the complaint falls within the OFS’ jurisdiction; or
  2. the complaint does not fall within the OFS’ jurisdiction but the FSP or AP, as the case may be, and the consumer agree for the complaint to be referred to the OFS. 
Where a complaint does not fall within the OFS’ jurisdiction and the FSP or AP, as the case may be, or the financial consumer disagree to refer the complaint to the OFS, the FSP or AP must refer the consumer to BNM’s Laman Informasi Nasihat dan Khidmat (BNMLINK).
 
Application to APs
 
APs are required to comply only with the requirements in the Policy Document relating to the notification of decisions and the escalation process but are encouraged to comply with the other provisions in the Policy Document.
 
Effective date
 
BNM has proposed in the Exposure Draft that the Policy Document is to take effect six months after the issuance date of the Policy Document.
 
Close of consultation  
 
Feedback on the Exposure Draft are to be submitted electronically to BNM by 8 November 2024 through https://forms.office.com/r/QSVKcdZELy.
 
Comments
 
The provisions of the Exposure Draft significantly enhances the requirements under the Existing Guidelines and sets clear (and shortened) timelines for FSPs to resolve complaints from financial consumers. The Exposure Draft also marks a step forward by imposing obligations on APs to comply with the requirements relating to the notification of decisions and the escalation process to the OFS or BNMLINK.
 
Article by Lee Ai Hsian (Partner) and Javene Fan (Senior Associate) of the Banking and Finance Practice of Skrine.
 
 

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.