Consumers urge adoption of simpler dispute resolution scheme

The banking and finance sector could do well to study a scheme that anticipates consumer complaints while providing a mechanism that arbitrates and settles complaints in the least costly manner.

The Consumer Assistance Facilitation Project (CAFP), an ongoing joint exercise between Filipino and Australian consumer advocates, suggested that industry association dispute resolution schemes might be an option as it could be more "user-friendly" to both banks and financing firms.

This, according to CAFP Philippines coordinator Ed L. Santoalla, is in light of the fact that consumers complaining about paying good money for products and services that are not at par with the qualities they are advertised for, often do not know where to go to seek redress of grievance.

There are many ways to try to get satisfaction, but most are formal, expensive and take a long time, as in the case of the courts, Santoalla said.

Quoting a CAFP discussion paper, Santoalla said industry associations like the Bankers Association of the Philippines (BAP) can benefit from studying and learning from the international experience with successful industry complaints handling arrangements.

Filipino consumer advocates who have been consulted on the proposal were unanimous in their recognition of the need for consumer complaint handling and settlement mechanisms that would be accessible and affordable to ordinary consumers.

"For consumers, the test of a complaint handling mechanism is how easy it is accessed, how much it costs, and whether it is both quick and fair," Santoalla said. "The best overseas industry schemes meet these tests because consumers and businesses share in their development and administration and independent people also participate," he added.

In the case of the Philippine finance industry, an organization paralleling the BAP could be established with representatives from industry and consumers who could jointly develop the dispute handling mechanism.

Santoalla said the United Nations (UN) endorsed such an approach as far back as 1985 and governments in many countries now have set up formal guidelines and standards for industry schemes.

For instance, the Australian guidelines have six main themes:

• Accessibility – the scheme should be made readily available to consumers by public promotion, being easy to use and having no cost barriers.

• Fairness – the decision-making processes and administration of the scheme should be independent of scheme members.

• Accountability – the scheme should publicly account for its operations by publishing its determinations and information about complaints and highlighting any systemic industry problems.

• Efficiency – the scheme should operate efficiently by keeping track of complaints, ensuring complaints are dealt with by the appropriate process or forum and by regularly reviewing its performance.

• Effectiveness – the scheme should be made effective by having appropriate and comprehensive terms of reference and periodic independent reviews of its performance.

The concept of a complaints handling and settlement mechanism jointly developed by industry and consumers is part and parcel of the concept of co-regulation, which the CAFP is proposing to be adopted in the country.

According to Santoalla, co-regulation or the so-called ‘graying’ of regulation is where the state delegates regulation of particular industries or professions to agencies set up with industry and consumer representation and independent chairperson in whom both sides have confidence.

"In such schemes, companies or professionals can agree to operate according to a code of conduct and to be bound by decisions of the agency. Such codes are easier to develop and change when necessary than legislation. Decision-making can be much more straight-forward and not bogged down by appeals to the courts," he said.

"The privatization of the regulatory function can be viewed, quite positively, as a means of containing the costs of regulation, including consumer complaints and disputes, and relieving taxpayers of the costs of using state institutions," he added. – TPT