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Consumer Financial Dispute Resolution in a Comparative Context

Consumer Financial Dispute Resolution in a Comparative Context Principles, Systems and Practice

Author: Dr Shahla F. Ali
Publisher: Cambridge University Press
ISBN: 9781107028715
Published In: March 2013
Format: Hardback , 267 pages
Jurisdiction: International ? Disclaimer:
Countri(es) stated herein are used as reference only

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Nearly all major global financial centres have developed systems of consumer financial dispute resolution. Such systems aim to assist parties to resolve a growing number of monetary disputes with financial institutions. How governments and self-regulatory organizations design and administer financial dispute resolution mechanisms in the context of increasingly turbulent financial markets is a new area for research and practice. Consumer Financial Dispute Resolution in a Comparative Context presents comparative research about the development and design of these mechanisms in East Asia, North America and Europe. Using a comparative methodology and drawing on empirical findings from a multi-jurisdictional survey, Shahla Ali examines the emergence of global principles that influence the design of financial dispute resolution models, considers the structural variations between the ombuds and arbitration systems and offers practical proposals for reform.

• Provides a comprehensive review of dispute resolution approaches, thereby helping the reader to gain familiarity with the spectrum of options available to address consumer financial disputes

• Identifies best practices in financial dispute resolution through comparative analysis of mechanisms around the world

• Synthesizes findings in the form of law and policy recommendations

List of figures	xi
List of tables	xii
Acknowledgements	xiii
Introduction	1
A financial crisis with global proportions	1
Viewing consumer financial dispute resolution in a theoretical context	3
Overview of methodology	5
Structure of the book	8
Part I Principles	11
1 Principles of consumer financial dispute resolution in a global context	13
Introduction	13
Theoretical perspectives on the impact of globalisation on international legal practice	14
Principles of consumer financial dispute resolution	16
Summary	31
Part II Ombuds systems	33
2 Financial dispute resolution in the United Kingdom	35
Introduction	35
Financial alternative dispute resolution programmes	40
Procedures of the Financial Ombudsman Service	47
Statistics	50
Service providers	51
Oversight	51
Strengths	52
Challenges	55
Lessons learned	62
Conclusion: the UK Ombuds Model and its contribution to consumer confidence	62
3 Financial dispute resolution in Australia	64
Introduction	64
Alternative dispute resolution in Australia	65
Financial alternative dispute resolution programmes	71
The Credit Ombudsman Service Limited	72
Underlying legal mandate	72
Types of dispute	75
Strengths	87
Challenges	88
Lessons learned	89
Contribution to consumer confidence and domestic financial performance	90
4 Financial dispute resolution in Japan	92
Introduction	92
Background	92
Japan’s new financial ombuds system	93
FINMAC	96
Types of dispute	98
Consumer financial dispute resolution in Japanese courts	99
Lessons learned	101
Contribution to consumer confidence	102
Part II overview: survey findings regarding the ombuds process	103
Survey design	103
Sample pool and distribution	103
Benefits of using an ombuds process for consumer financial dispute resolution	105
Areas for improvement	106
Suggestions for further development	107
Conclusion	108
Part III Arbitration systems	109
5 Financial dispute resolution in the United States	111
Introduction	111
The American Arbitration Association	111
Challenges and shortcomings of mandatory consumer credit card arbitration	113
Financial dispute resolution through FINRA	114
Self-regulatory organisations: FINRA	115
FINRA mandate and function	120
Underlying legal mandate	122
Types of dispute	122
Oversight	126
Strengths	126
Challenges	127
Contribution to consumer confidence	132
Contribution to domestic financial performance	135
6 Financial dispute resolution in Singapore	137
Background	137
Financial alternative dispute resolution programmes	139
Structure	140
Underlying legal mandate	140
Dispute resolution	142
Strengths	148
Challenges	149
Lessons learned	149
7 Financial dispute resolution in Hong Kong	152
Background	152
Strengths	162
Challenges	163
Lessons learned	166
Contribution to domestic financial performance and consumer confidence	168
Part III overview: survey findings regarding the arbitration process	169
Benefits of using an arbitration process for consumer financial disputes	170
Challenges in implementing the use of arbitration in consumer financial disputes	172
Suggestions for improving overall efficacy of the arbitration process in consumer financial disputes	174
Conclusion	175
8 Emerging systems: financial dispute resolution in China	176
Background	176
Underlying legal mandate	177
Financial alternative dispute resolution programmes	177
Strengths	183
Challenges	184
Part IV Practice	187
9 Synthesising lessons learned and policy recommendations	189
Background	189
Jurisdiction	191
Assessment and recommendations	196
Dispute type	196
Assessment and recommendations	203
Procedural models	203
Assessment and recommendations	207
Second stage: mediation/conciliation	208
Assessment and recommendations	211
Third step: a fork in the road – ombuds or arbitration process	211
Assessment and recommendations	220
Awards	221
Assessment and recommendations	221
Costs	224
Purposes of charging	224
Assessment and recommendations	225
Assessing consumer financial dispute resolution in a regulatory setting	225
Systemic issues and parallel jurisdiction	231
Regulator intervention and parallel jurisdiction	232
Distinguishing between regulatory and non-regulatory financial dispute resolution schemes in other jurisdictions	235
Assessing the appropriateness of dispute resolution methods for financial regulation	237
Regulatory structure informing the future shape of financial dispute resolution	239
Conclusion: the way forward	241
Bibliography	244
Index	261

Dr Shahla F. Ali
The University of Hong Kong

Advance praise: 'This book provides a wide-ranging comparative assessment that will be of great value to anyone analyzing or designing dispute resolution systems for consumer disputes. The detailed descriptions of arbitration and ombudsman mechanisms in six countries, as well as Dr Ali's recommendations, illuminate the continuing evolution of global norms for dispute resolution.' Stephanie E. Smith, Stanford Law School

'This is a valuable primer to the growing universe of consumer financial arbitration, particularly with its emphasis on countries in the Asia Pacific region.' Michael Hwang, Michael Hwang Chambers, Singapore

'This comprehensive volume breaks new ground in surveying and comparing multiple dispute resolution systems across world regions against a backdrop of carefully outlined principles including fairness, impartiality, transparency and consistency. Well-written, thoughtful and empirically supported, it is a 'must-read' for scholars, practitioners and end-users of commercial dispute resolution. It also productively outlines a way forward for practice in this area informed by best practices from a range of contexts.' Michelle LeBaron, University of British Columbia

'Anyone interested in the intersection of consumers, monetary disputes with financial institutions, and turbulent financial markets must read this book. It provides an articulate and thoughtful comparison of processes, from mediation and conciliation to ombudsmen, arbitration and litigation, taking us around the world to the UK, Australia, Japan, the US, China, Singapore and Hong Kong to look at differing systems of dispute resolution.' Lela P. Love, Director, Kukin Program for Conflict Resolution and the Cardozo Mediation Clinic, Benjamin N. Cardozo School of Law, New York