RBZ mulls public protector office

via RBZ mulls public protector office | The Herald August 21, 2015 by Happiness Zengeni

The Reserve Bank of Zimbabwe will set up the Office of Financial Public Protector to resolve disputes against financial institutions and their customers, according to the Banking Amendment Bill. This comes amid concerns over the period it takes to resolve disputes in the financial services sector before the courts of law.

The Banking Amendment Bill gazetted recently says that the Office of the Financial Public Protector shall attempt to resolve disputes by negotiation, mediation, conciliation or determination, as may be appropriate in each particular case but in all cases the procedures adopted by the office shall be informal, fair and cost-effective.

Funding of the office will be provided by the RBZ while the service provided by the office will be free to the customers whose disputes with financial institutions are dealt with by the office.

The new office will consist of a board, a panel of financial protectors and the chief Financial Public Protector.

A banking sector source told the Herald Business that the Office will deal with issues which sometimes go to court but can easily be resolved within the sector and outside the court system.

“For example the case against the now-closed Kingdom Bank and its customer who lost an ATM card and did not make a timely report to the bank. The customer sued the bank but lost the case at the High Court, a situation which would have been easily solved had this office of the FPP been available.”

In the case, the High Court ruled that losing ones bank ATM card and not making a timely report to the issuing bank, will nullify the ability of a customer to obtain redress in the event of subsequent losses from the fraudulent use of ones bank card.

In a seminal judgement dated 7 Oct 2014, issued in favour of Kingdom Bank Limited, which was being sued by their customer, Sibongile Taurai Zimbeva, the high court ruled that the customer had failed to properly and timeously report the loss of her bank ATM card to the bank, resulting in her bid to recover $7,548.91 from the bank.

The ruling emphasized how important it is for a bank customer to safeguard their bank cards, but also to jealously guard important details such as the secret Personalised Identity Number, (PIN) which is given to the customer by the bank.

“The function of the office of the Financial Public Protector shall be to resolve disputes between banking institutions and other financial institutions, on the one hand, and their customers, on the other,” the Bill says.

It will be superintended by a five-member board appointed by the RBZ in consultations with the Minister of Finance and Economic Development. The board will appoint a panel of financial public protectors.

Once a year, by such a date the RBZ may specify, the board will submit a report to the central bank on the discharge of its functions during the previous year.

The setting up of the office of the Financial Public Protector is part of a raft of measures contained in the Banking Amendment Bill to enable it to deal more effectively with developments in the financial sector.

Some of the objectives of the amendment to the Banking Act (Chapter 24:20) include improving the corporate governance of banking institutions, to make banking instituitions more responsive to their customers’ needs and to encourage the resolution of disputes between banks and their customers.

The amendments also seek to introduce greater transparency in the shareholding and operations of banking institutions, to allow banking regulators to monitor and regulate holding companies and to increase co-operation between the different financial regulatory companies.

The Bill will also amend the Reserve bank of Zimbabwe Act (Chapter 22:15) and the Deposit protection Corporation Act (Chapter 24:29) and will repeal the Troubled Financial Institutions (Resolution) Act (Chapter 24:28).

Under shareholding and control of banking institutions, the principal Act is amended by the insertion of a new part which sets limits on shareholding in banking institutions and controlling companies.

The new requirements say that no individual will hold shares in a banking institution or a controlling company if the shares exceed ten percent of the total nominal value or the total voting rights of all the issued shares of the banking institution or controlling company, without permission of the Registrar.

No corporate body, other than- a registered controlling company or a body corporate will hold shares in a banking institution or a controlling company if the shares exceed 25 percent of the total nominal value or the total voting rights of all the issued shares of the banking institution or controlling company.