Good Practices: Banking Sector



Yüklə 308,89 Kb.
səhifə8/15
tarix31.08.2018
ölçüsü308,89 Kb.
#65724
1   ...   4   5   6   7   8   9   10   11   ...   15

Recommendation

The NBT should draft, with input from the banking industry, a new NBT instruction on the confidentiality of customer information that goes further than a definition of what information is considered a banking secret and the circumstances under which it may be revealed. To the extent possible given the technology currently in use in banks, rules should be formulated governing the handling and storage of customer information in daily banking operations. These should be drafted with an eye both to preventing unauthorized access to banking secrets and to improving records concerning which authorized users have accessed that information so as to improve enforcement ability. Such a detailed regulatory instruction would also provide NBT with the substance and detail needed to review bank practices in this area during inspections and to impose appropriate corrective measures where necessary. If desired, regulatory instructions on this issue could be included in a new general instruction on bank recordkeeping, as discussed in the recommendation in section C.3.
Customers should be informed by the bank about the rules concerning secrecy of banking information and the exceptions to those rules when they open an account. If customers are not currently receiving that information under the requirements of point 20 of Instruction #171 of the NBT, that instruction should be amended to make clear that information on the secrecy rules and exceptions is a “condition” of a bank account that falls under the rules stated in point 20 for provision of information. In the alternative, rules concerning information to customers on bank secrecy and the exceptions to bank secrecy could be included in a new unified instruction on the provision of information to customers, as discussed in sections B.7 and B.8.
Amendments should be made to the criminal and administrative sanctions available in this area to resolve inconsistencies, extend coverage to banking secrets of private individuals, and provide for less serious and more easily administrable sanctions that can be imposed for violations of secrecy alone (without the need to show intent and damages). Once these rules are in place, a visible enforcement effort and commitment by authorities to improvement in this area may be necessary to allay concerns.
To the extent that the problems experienced by individuals whose information has been revealed are related to pressure from state or local officials or predatory behavior by corrupt organizations, individuals may be unwilling to report such incidents. In addition to other efforts, consideration should be given to provision of a means for consumers or customers to make confidential or even anonymous reports or complaints to the state body responsible for consumer protection in banking indicating that they believe that their banking information has been compromised. This could provide some additional means to assess the extent of actual problems experienced.


Good Practice D.2


Sharing Customer’s Information

  1. A bank should inform its customer in writing:

    1. of any third-party dealing for which the bank is obliged to share information regarding any account of the customer, such as any legal enquiry by a credit bureau; and

    2. as to how it will use and share the customer’s personal information.

  2. Without the customer’s prior written consent, a bank should not sell or share account or personal information regarding a customer of the bank to or with any party not affiliated with the bank for the purpose of telemarketing or direct mail marketing.

  3. The law should allow a customer of a bank to stop or opt out of the sharing by the bank of certain information regarding the customer and, prior to any such sharing of information for the first time, every bank should be required to inform each of its customers in writing of his or her rights in this respect.

  4. The law should prohibit the disclosure by a third party of any banking-specific information regarding a customer of a bank.

Description

a. Instances in which banks must release customer information are stated in the law “On Banking Activity” (Articles 48 and 50). Nearly all of these relate either to authorized state bodies or to bodies or persons involved with banking supervision and audit. The law “On Banking Activity” does list provision of information to a credit bureau as a possibility, but such release is to be in accordance with the law “On Credit Histories,” which in turn requires that a bank obtain a customer’s written consent to release information to the bureau about that customer.

NBT’s regulatory instructions require that consumers opening an account be informed of the conditions applying to a bank account and the costs involved, and that a consumer sign a statement indicating that this has occurred (Instruction #171, point 20). The instructions do not, however, provide detail concerning whether the “conditions of the account” include matters such as confidentiality requirements and other legal rules, or only the specific contractual provisions applicable to the account (e.g. interest rate, penalties, fees, and so forth). If consumers are not receiving an explanation of the secrecy requirements and exceptions as a part of the information provided when opening an account, it may be appropriate for the cited instruction or the separate instruction discussed above in D.1. to include a requirement that this be done.



b. Current law does not envision any ability of banks in Tajikistan to share customer information with third parties for advertising or other purposes not envisioned by law. Banks reported that they can reveal customer information only with written customer consent unless provided by law, but the law does not even clearly provide the banks with the ability to obtain a general consent for other purposes. In theory, it would be possible for banks to include a provision in contracts allowing the release of customer information for such purposes. Although they were requested, no bank contracts could be obtained for this diagnostic and no review could be done on this issue. In conversations with banks and other counterparts, however, there was no indication that banks are currently attempting to use customer information even to market their own additional services.

c. No ability to “opt out” of information sharing is envisioned by law or regulations as they address only instances in which the bank is obligated to provide information. The only exception to this is the provision of information to a credit bureau, which requires the written consent of the consumer.

d. Third parties who receive information constituting a banking secret through their official positions or work duties are also obligated to protect it. Article 49 of the law “On Banking Activity” extends secrecy obligations to the staff of NBT, persons conducting inspections for NBT, and any other persons who have access to reports or information directly or indirectly as a result of their profession, position, or activities. The criminal provisions concerning revelation or use of banking secrets that are discussed in section D.1. also cover all persons who have access to such information as a result of their profession or official position.


Recommendation

On the basis of information available during the diagnostic review, there does not appear to be a pressing need for substantial change in the law in this area. If consumers are not receiving an explanation of the legal rules concerning bank secrets and the exceptions to those rules as a part of the written information provided when opening an account, Instruction #171 should be amended to require that this take place. Such a requirement could also be envisioned in a new Instruction on treatment of customer information, as discussed in D.1.


Good Practice D.3

Permitted Disclosures

The law should provide for:

    1. the specific rules and procedures concerning the release to any government authority of the records of any customer of a bank;

    2. rules on what the government authority may and may not do with any such records;

    3. the exceptions, if any, that apply to these rules and procedures; and

    4. the penalties for the bank and any government authority for any breach of these rules and procedures.

Description

(i) The law “On Banking Activity” provides for release of customer information that constitutes a banking secret only to the account holder and to the following:

-- the NBT;

-- a court on the basis of a decision of the court;

-- a member of the court enforcement service on the basis of a decree of the court enforcer in connection with an execution order;

-- a credit bureau, in accordance with the law “On Credit Histories” (that law requires written consent of the client);

-- criminal investigation bodies in connection with a criminal investigation in relation to the customer, on the basis of a decree of the court in accordance with the criminal procedure code;

-- tax bodies concerning questions of the payment of taxes by a legal entity that is the subject of a tax inspection, on the basis of a letter of the head of the tax body and with presentation of a copy of the order of the tax body on the inspection, if this is envisioned by the tax code.

Upon the death of a client, information may be provided to the persons indicated in the client’s will, or to a court, notarial office, or foreign consulate that is handling the estate of the deceased client.



The law does not address the question of whether the bank must, may, or may not inform the customer in any of these instances. This is a particularly important issue in an environment where banking customers may fear use or revelation of their banking information for improper or predatory purposes. (Such fears were reported by some parties during the diagnostic review to be retarding the use of banks.) While in some cases (for example, some kinds of criminal investigation), confidentiality might be needed, it would add clarity and important protection for the consumer if the banking laws specifically required notice to the customer concerning some kinds of requests for banking information. Inclusion of the customer’s information in an NBT inspection, or in the information provided to a credit bureau after the customer’s written release, should not require notice, nor should inquiries from criminal investigation bodies or the courts if there is an appropriate order of the procurator or court concerning confidentiality in the specific case. However, if the release is in relation to a court decision that is a public matter, or in relation to an execution order or a proper tax audit or investigation, those are events about which a customer should have received notice and the bank should be required to notify the customer concerning the demand. This would allow the customer to take appropriate action if they have not received proper notice of the underlying events. If there are types of demand that are subject to abuse or that cause particular damage to public confidence in the safety of banking information, the requirement for notice could envision a delay period before the bank complies with the demand and an appropriate means for the customer to appeal the order on which it is based.
The provisions of the law “On Banking Activity” regarding release of information to tax bodies refer to information concerning the accounts of “legal entities” and so do not appear to cover access by tax inspectors to the bank records of individual persons (natural persons), including those conducting individual business activities. This does not appear to be consistent with either the provisions of the prior Tax Code or the recently adopted new Tax Code, both of which envision access by tax authorities to information on the accounts of both individuals and legal entities. This inconsistency may create legal uncertainty and should be resolved by an appropriate amendment.
The new Tax Code (Article 56), requires that a bank provide information on the existence of accounts of a taxpayer that is the subject of a verification (that is, an audit or investigation) and on the balances and movements of funds in those accounts. The information must be provided within 5 days of the receipt by the bank of a written demand by the tax bodies. There is no limitation of this requirement to legal entities, and individual taxpayers may be the subjects of a verification. A bank must also provide such information, on the same written demand and within the same period, on taxpayers that have officially been recognized as “irresponsible” on the basis of prior findings of violation and identified as such by a posting on the website of the authorized state body.

In addition to access to the banking and other information of a taxpayer that is subject to a primary audit or investigation to determine if taxes are being properly calculated and paid, the tax bodies may also demand information from other persons and entities concerning specific transactions or operations in order to determine whether they have been properly reported by another taxpayer that is being audited. The Tax Code uses the same term for nearly all forms of audit, investigation, or inquiry by the tax bodies – “verification.” (See Article 28, part 4 of the Tax Code.) As the provisions of Article 56 concerning access to bank account information specify only that a demand be in relation to a taxpayer that is the subject of a verification, it appears that a mandatory demand might be made upon the bank in these circumstances as well. This type of verification – called a “counter-verification” – is limited by the Code to confirmation of the payments or transactions in question, but a request for bank information required to make such a confirmation might conceivably be broader.

The new Tax Code itself does not define the level at which a decision concerning the verification of a specific taxpayer is to be made, nor does it specify the persons within the tax bodies who are authorized to issue a written demand for bank information. Such matters would normally be defined in the regulations and instructions issued under the Code, which were not available during this diagnostic review (and may not yet have been issued). There is no provision in the Code for independent review (by a court, procurator, or special office within the tax authority) either of decisions on the conduct of audits or investigations or of demands to banks for account information. As noted above, some participants in the diagnostic review indicated concern about the security of personal financial information and possible predation on the basis of improper access to or use of such information, including by employees of the tax authorities. If this perception is widely shared, it may be appropriate to consider the use of additional mechanisms for protection of customer information in relation to tax inquiries. Mechanisms that have been used in other systems include a requirement of notice to the customer before release of account information to the tax bodies (with an ability of the customer to appeal the order to an administrative or judicial officer or body), a requirement for specific customer consent for release of banking information to the tax bodies (with an ability of the tax authorities to obtain a mandatory order from an administrative or judicial body or officer if it is denied), or a requirement for prior approval of all such demands for banking information by a body or officer independent of the tax authority.

(ii) & (iii) The provisions of the laws on the basis of which access is to be sought generally govern how the body in question will request the information and how it must treat the information. Information that forms a part of the materials of a civil court case, for example, will be subject to the rules of Article 11 and Article 59 of the Code of Civil Procedure. These articles require the court to examine material containing a legally protected secret in a closed court session and to warn those who have access to information by way of their participation in the court case about legal liability for revelation of that information. Procedural rules concerning court treatment of legally protected information are currently somewhat undeveloped, and do not provide for the possibility for private judicial review, the use of redacted versions of filings, or special storage of case files containing such materials. Those governing the activity of other bodies are likely to be similarly limited.

In relation to access by tax bodies, the new Tax Code itself does not define the specific procedures to be used for protection of banking information obtained during an audit or investigation. Regulations and instructions that might provide such rules or guidance were not available during this diagnostic review (and may not yet have been issued under the new Code). Specific, binding rules should be issued that govern access to confidential banking information by employees of the tax authority, recording of which employees have had such access, secure storage of the information, and its destruction.



(iv) Persons who have access to information that constitutes a banking secret through their work in state bodies would be covered by the criminal law provisions on illegal use or revelation of that information that are discussed in section D.1. above. The recommendations in that section for less draconian and more easily applicable sanctions would apply here as well. It is not clear that the criminal provisions would be applicable to private parties who become aware of banking secrets as a result of their participation in a court case or as parties in a criminal investigation. Questions were also raised by some commentators during the review concerning whether private parties associated with a credit bureau would be subject to the same provisions, or would be subject to lesser sanctions on the grounds that they have ceased to be a banking secret when the customer approved their transfer to the bureau.


Recommendation

The law “On Banking Activity” should be amended to require a bank to notify a customer about a request for information from an authorized government body or official. In the alternative, this requirement could be included in a separate instruction on the treatment of customer information as discussed in D.1. Rules in this area should envision an obligation of the bank to inform the customer concerning any inquiry that is allegedly based on an event or order about which the customer should have received notice, and should obligate the bank to obtain and to provide to the customer all documents and information required to confirm the source and legitimacy of the demand.
Procedures and instructions governing access by tax bodies to banking information of individuals should ensure that proper grounds are required for the initiation of verifications (audits, investigations) and that written demands to a bank for account information are properly justified and the information protected. Serious consideration should be given to the use of additional mechanisms for protection of customer banking information in relation to inquiries from tax bodies. Mechanisms for consideration include a requirement of notice to the customer before release of account information to the tax bodies (with an ability of the customer to appeal the order to an administrative or judicial officer or body), a requirement for customer consent for release of banking information to the tax bodies (with an ability of the tax authorities to obtain a mandatory order from an administrative or judicial body or officer if it is denied), or a requirement for prior approval of all such demands for banking information by a body or officer independent of the tax authority (a court, procurator, or administrative body or officer).
Inconsistency between the provisions of the Tax Code and the provisions of the law “On Banking Activity” concerning access to banking information by tax authorities should be resolved to avoid legal uncertainty.
Eventually, more effective and comprehensive rules will be needed for the protection of confidential information (including banking secrets) that is involved in court consideration of any case in which such information is used. This is a larger task that will have to be undertaken as court practice in civil and administrative matters involving such information develops.

Good Practice D.4

Credit Reporting

  1. Credit reporting should be subject to appropriate oversight, with sufficient enforcement authority.

  2. The credit reporting system should have accurate, timely and sufficient data. The system should also maintain rigorous standards of security and reliability.

  3. The overall legal and regulatory framework for the credit reporting system should be: (i) clear, predictable, non-discriminatory, proportionate and supportive of consumer rights; and (ii) supported by effective judicial or extrajudicial dispute resolution mechanisms.

  4. In facilitating cross-border transfer of credit data, the credit reporting system should provide appropriate levels of protection.

  5. Proportionate and supportive consumer rights should include the right of the consumer

  1. to consent to information-sharing based upon the knowledge of the institution’s information-sharing practices;

  2. to access his or her credit report free of charge (at least once a year), subject to proper identification;

  3. to know about adverse action in credit decisions or less-than-optimal conditions/prices due to credit report information;

  4. to be informed about all inquiries within a period of time, such as six months;

  5. to correct factually incorrect information or to have it deleted and to mark (flag) information that is in dispute;

  6. to reasonable retention periods of credit history, for instance two years for positive information and 5-7 years for negative information; and

  7. to have information kept confidential and with sufficient security measures in place to prevent unauthorized access, misuse of data, or loss or destruction of data.

  1. The credit registries, regulators and associations of banks should undertake campaigns to inform and educate the public on the rights of consumers in the above respects, as well as the consequences of a negative personal credit history.

Description

a. – f. inclusive: A law was adopted in March 2009 authorizing the creation of a credit histories bureau that will collect credit information and provide credit histories to assist in the assessment of the creditworthiness of potential borrowers. The law provides for credit history information to be given to the bureau only if the subject of the information gives written consent and also for written consent for any access to the information held on a consumer by the credit bureau. It contains a number of provisions requiring the use of data protection technology and defines credit bureau information as confidential. This category provides some legal protection, but less than that accorded to information defined as bank secrets. NBT is designated as the regulator for the credit histories bureau, which has not yet been created in practice. There are not yet any detailed instructions from NBT on the treatment of data by the credit bureau(s).
Banks are eager for the credit bureau to begin work, as they experience serious problems in determining when a borrower (and especially an individual entrepreneur) is already indebted to other banks. However, there appear to be some misunderstandings and perhaps some legal uncertainties concerning the nature of the information that is provided to and provided by a credit bureau and the ways in which the records are kept and accessed. Some banks, for example, appeared to believe that the only information that would be submitted to the credit bureau concerning a customer would be their identity and the fact that they had taken a loan from a particular bank and had (or had not) repaid it. At least one bank had apparently assured customers that the amounts of money they had borrowed and the specifics of their repayments would not be reported. Provisions of the law “On Credit Histories” appear to require that the NBT be given copies of all “credit histories” held by the bureau. This would seem to indicate an understanding of the credit history as a file of information stored on a server and updated with periodic notations. In practice, most credit reporting systems do not retain files or data on individuals but rather provide a “data snapshot” that the reporting system assembles from reporting sources at the time of a request. These and other bumps and misunderstandings will need to be resolved as the first credit bureau begins to be formed and the NBT and participating banks and organizations become more familiar with its operation.


Recommendation

As the first credit bureau is formed and begins to put in place reporting structures and to train NBT and participating banks and organizations in its use, NBT should work to ensure that regulatory instructions and internal rules and procedures are in place to protect consumers and information about them. This should include requirements for consumers to receive clear and accurate information about the credit bureau, its functions, and their rights in relation to credit history information and its use by lenders. Specific procedures should be envisioned in NBT instructions to implement in practice the guarantees of confidentiality, rights to correct information, rights of review and other consumer protections envisioned in the law.



SECTION E


DISPUTE RESOLUTION MECHANISMS


Good Practice E.1

Internal Complaints Procedure

  1. Every bank should have in place a written complaints procedure and a designated contact point for the proper handling of any complaint from a customer, with a summary of this procedure forming part of the bank’s Terms and Conditions referred to in B.7 above and an indication in the same Terms and Conditions of how a consumer can easily obtain the complete statement of the procedure.

  2. Within a short period of time following the date a bank receives a complaint, it should:

    1. acknowledge in writing to the customer/complainant the fact of its receipt of the complaint; and

    2. provide the complainant with the name of one or more individuals appointed by the bank to deal with the complaint until either the complaint is resolved or cannot be processed further within the bank.

  3. The bank should provide the complainant with a regular written update on the progress of the investigation of the complaint at reasonable intervals of time.

  4. Within a few business days of its completion of the investigation of the complaint, the bank should inform the customer/complainant in writing of the outcome of the investigation and, where applicable, explain the terms of any offer or settlement being made to the customer/complainant.

  5. When a bank receives a verbal complaint, it should offer the customer/complainant the opportunity to have the complaint treated by the bank as a written complaint in accordance with the above. A bank should not require, however, that a complaint be in writing.

  6. A bank should maintain an up-to-date record of all complaints it has received and the action it has taken in dealing with them.

  7. The record should contain the details of the complainant, the nature of the complaint, a copy of the bank's response(s), a copy of all other relevant correspondence or records, the action taken to resolve the complaint and whether resolution was achieved and, if so, on what basis.

  8. The bank should make these records available for review by the banking supervisor or regulator when requested.

Description

a. Most of the banks interviewed for the diagnostic review reported that they have a clear procedure and hierarchy for reviewing customer complaints. In most cases, however, the procedure described was not solely for customer complaint review but rather a general procedure and path for the resolution of problems of any type that could not be resolved by the local employee or manager that first encountered them. As such, they represent the banks general internal operating procedures and would not be in a form appropriate to inclusion in contracts or statements of terms and conditions. No bank indicated the existence of any formal, written policy or procedure for customer complaints that could be shared during the diagnostic review work. Several banks did emphasize that customers were given the opportunity to take a complaint to the highest level of bank management, both by the escalation procedures within the bank and also by the use of weekly “open door” hours on the part of senior bank officials.

b. – e. The formal written complaint and notification procedures described in these points of the good practice description do not appear to be a part of bank complaint resolution practices. The banks’ procedures were described as considerably less formal, particularly at the early stages of the process. Some banks did indicate that they provide information to customers on how to contact the bank with a complaint, but this did not appear to differ from the provision of general contact information for the bank. Although requested, no copies of customer contracts or information packets were obtained and so no review of their contents on this issue could be done.

f. – h. Banks are not required to keep detailed records of all complaints and their resolution or to make such records available to NBT or other bodies, and there does not appear to be any practice of this kind. Some banks do keep some kinds of internal records of both complaints and other kinds of inquiries in order to monitor bank performance. One bank was able to illustrate this practice, displaying a list of calls made to the bank with complaints and questions and an indication of where the calls were directed. Outcomes of the referral were not listed.

An exception on the issue of record keeping may be complaints in relation to loan accounts, which are covered by the more detailed requirements for records of such accounts contained in NBT Instruction #186. Point 36 of that instruction requires that all meetings and conversations, telephone conversations, results of negotiations and inspections, and also all correspondence connected with the credit account be kept in the credit record. This would seem to include any communication of a complaint. In theory, such complaints would be available to NBT during an inspection, but there is no requirement that they be reported or even particularly identified in any way.




Recommendation

NBT should issue instructions regarding the handling and recording of customer complaints by banks. Given the level of financial sophistication of consumers, the simplicity of banking products offered, and the apparent social constraints on the use of formal complaint mechanisms, care should be taken that the instructions ensure the proper handling and recording of complaints received by telephone and in person at the bank. Banks should be required to keep a record of all such complaints and their resolutions, and rules should be in place concerning when a written record should also be provided to the customer. The instructions will need to include a clear definition of what constitutes a “complaint” for these purposes – since there may be little to distinguish between a complaint and an inquiry and some “complaints” may be resolved by an explanation to customer.

Consideration could be given to defining the requirement for record keeping in terms of “inquiries” rather than or in addition to “complaints.” For example, a bank might record all inquiries concerning the accuracy of interest calculations, or about delayed, missing or inaccurate transactions in accounts. This would have the advantage of providing more accurate information about customer problems (including problems that are based on a misunderstanding rather than any bank error or misconduct) and could assist banks, the NBT, and other interested parties in devising better materials and programs to inform and educate consumers. In order not to overburden banks with reporting requirements, however, definitions would need to be clear concerning what must be reported and the reporting method would need to be simple.

Banks should also be required to have more formal, written procedures for those who might wish to use them, including identification of responsible parties, indication of the appropriate channel for escalation of a complaint to higher levels in the bank, rules concerning the timeframes in which customers must be informed about the results of consideration of the complaint, and other pertinent information.

NBT instructions that deal with customer accounts and information (such as Instruction #171 and Instruction #186) should require that customers be provided with a copy of the rules concerning the handling of complaints and inquiries, both oral and written, when opening an account and that the rules should be posted or available in written form in bank branches.

Banks should be required to keep records of complaints and their resolution and to make the information available to NBT. A requirement to publish information on complaints may be useful in providing incentives to avoid them, but it may be appropriate in the short term to provide banks with strong incentives to record and report complaints and problems and to develop good practices in addressing them rather than to provide a disincentive for disclosure in the form of publication.


Good Practice E.2

Formal Dispute Settlement Mechanisms

  1. A system should be in place that allows customers of a bank to seek affordable and efficient recourse to a third-party banking ombudsman or equivalent institution, in the event the complaint of one or more of customers is not resolved in accordance with the procedures outlined in E.1 above.

  2. The existence of the banking ombudsman or equivalent institution and basic information relating to the process and procedures should be made known in every bank’s Terms and Conditions referred to in B.7 above.

  3. Upon the request of any customer of a bank, the bank should make available to the customer the details of the banking ombudsman or equivalent institution, and its applicable processes and procedures, including the binding nature of decisions and the mechanisms to ensure the enforcement of decisions.

  4. The banking ombudsman or equivalent institution should be appropriately resourced and discharge its function impartially.

  5. The decision of the banking ombudsman or equivalent institution should be binding upon the bank against which the complaint has been lodged.

Description

a. – e. There is no financial ombudsman or any institution performing similar functions in Tajikistan.

Responsibility for the enforcement of consumer protection rules on the basis of specific complaints and own-initiative investigations currently rests with the antimonopoly body, which is tasked with enforcement of the competition law, consumer protection law, and advertising law. That body appears to lack any experience or expertise in banking matters and already faces significant resource constraints in meeting its higher profile obligation to deal with natural monopoly regulation and competition concerns across the economy as a whole. The antimonopoly body is a very new institution and as yet has no rules defining its procedures for investigation and decision-making in its areas of responsibility. Even when these processes have been defined, it is unlikely that they will be focused on a quick resolution of complaints, including through informal means, rather than the enforcement of the law through the issuance of orders and of fines and penalties.


Consumers currently lack any direct channels to quickly and effectively resolve disputes with banks that are not resolved by the banks’ own initial complaint procedures. Processes that involve escalating a dispute through the higher ranks of bank management, waiting for an investigation and ruling by the antimonopoly body, or filing a complaint in court will be unattractive in terms of cost and/or delay.

The creation of a body or institution with the power to undertake the rapid resolution of such matters is highly desirable, but may present institutional and resource challenges and is unlikely to be a priority until and unless the regulator and authorities begin to perceive a substantial need in the form of a significant number of consumer complaints. Options will include the creation of a unit or office under the authority of the NBT, the creation of a separate financial ombudsman or of financial ombudsman services within the office of the existing ombudsman’s office, or the creation of a complaints board with the participation of the Association of Banks of Tajikistan, the NBT and consumer protection authorities that would have similar powers. Binding authority may not be appropriate for the body or institution in the short term, particularly if it is created relatively soon. Laws and regulations are, in many areas of banking, still in the early stages of development, as are banking practices. With respect to many potential disputes, it is not clear what sources an ombudsman or similar institution would draw upon to define the requirements and limits of legal behavior. It is important that clear legal rules and standards be developed and that those rules and standards be consistent with and fit into the broader legal framework of Tajikistan, including constitutional, civil and administrative norms and procedures. Quick and binding resolution of disputes by an ombudsman where laws and regulations are inadequate may produce arbitrary results not based in law and/or retard necessary development of the legal framework and review of existing legislation.



Recommendation

If responsibility for investigation of consumer complaints in the banking sphere remains with the antimonopoly body, additional resources will need to be provided and corresponding amendments made in its statute and in rules governing its procedures to ensure appropriate involvement of banking experts and the banking regulator in its decisions. At a minimum, the rules should require that the antimonopoly body specifically assign responsibility for cases concerning banking and finance to a department, sub-department or official (to encourage the development of expertise) and should also require that decisions on such cases involve consultation with the regulatory authority. If desired, the procedure for decision on these categories of cases could require the participation of representatives of the regulatory body along with officials of the antimonopoly body.
In order to raise consumer confidence and willingness to deposit funds, it may be necessary for special mechanisms to be created for the quick resolution of particular types of disputes or for particular categories of consumers. On the basis of information received by the regulator concerning complaints and concerns of consumers, the regulator should consider whether special mechanisms for resolution of consumer problems are needed in relation to particular categories of problem or groups of consumers. The regulator should have the authority to convene a working group together with consumer protection authorities, representatives of the banking industry to consider workable solutions for these situations. Such solutions could be imposed by the regulator (if within its authority), voluntarily implemented by the industry alone or with the participation of consumer protection bodies, or created in another way.
The creation of an institutional mechanism for the rapid resolution of consumer disputes related to banking issues is desirable, but is unlikely to be a priority in the short term until the regulatory and other authorities begin to receive information on the existence, type, and prevalence of consumer problems in this area. There are a number of options that might be appropriate, including an ombudsman’s office, a dispute resolution board with participation of both public bodies and representatives of the industry, or other configurations. With respect to any such special mechanisms, care will need to be taken to ensure that arbitrary decision-making is avoided and that there is no retardation of necessary development of laws and regulations. Decisions should not be legally binding at the outset, or should at least be clearly subject to appeal. Mechanisms should be in place requiring communication between the ombudsman or other institution for dispute resolution and the other bodies that play important roles in the banking sphere (NBT, consumer organizations, the antimonopoly body) to ensure that information on complaints and problems is shared and that action can be taken by those bodies on a broader scale if required.


Good Practice E.3

Publication of Information on Consumer Complaints

  1. Statistics and data of customer complaints, including those related to a breach of any code of conduct of the banking industry should be periodically compiled and published by the ombudsman, financial supervisory authority or consumer protection agency.

  2. Regulatory agencies should publish statistics and data and analyses related to their activities in respect of consumer protection regarding banking products and services so as, among other things, to reduce the sources of systemic consumer complaints and disputes.

  3. Banking industry associations should also analyze the complaint statistics and data and propose measures to avoid the recurrence of systemic consumer complaints.

Description

a. There is currently no body that serves as the primary or central recipient of consumer complaints in the banking sector. All of the bodies that might receive such complaints reported that they have received few or no consumer complaints concerning banking activities (NBT, the antimonopoly body, the banking association, and the consumer association). Banks also reported that they receive few complaints. Neither the state bodies nor the banks publish information on consumer complaints.

b. & c. There is currently little or no enforcement activity in relation to consumer protection in banking and financial services, so there is nothing for regulatory agencies to report or for the banking association to analyze. The antimonopoly agency does publish an annual report on its general activities, but that agency has not yet addressed any issues related to banking.


Recommendation

A requirement for the collection and publication of the relevant statistics and information should be included in the duties of the body that is identified to the public as the proper recipient of complaints (see B.6 above). In the immediate period, while complaint numbers are very low, this requirement could be met by the inclusion of an appropriate statement or section in the annual report of the relevant body.

Banks should be required to keep records of complaints and their resolution and to make the information available to NBT, as discussed above in section E.1. A requirement that banks publish information on complaints may be useful in providing incentives to avoid them, but it may be appropriate in the short term to provide banks with strong incentives to record and report complaints and problems and to develop good practices in addressing them rather than to provide a disincentive for disclosure. Any requirement for publication of complaints that identifies the banks involved could be instituted at a later time.




SECTION F


GUARANTEE SCHEMES AND INSOLVENCY


Good Practice F.1

Depositor Protection

  1. The law should ensure that the regulator or supervisor can take necessary measures to protect depositors when a bank is unable to meet its obligations including the return of deposits.

  2. If there is a law on deposit insurance, it should state clearly:

  1. the insurer;

  2. the classes of those depositors who are insured;

  3. the extent of insurance coverage;

  4. the holder of all funds for payout purposes;

  5. the contributor(s) to this fund;

  6. each event that will trigger a payout from this fund to any class of those insured;

  7. the mechanisms to ensure timely payout to depositors who are insured.

  1. On an on-going basis, the deposit insurer should directly or through insured banks or the association of insured commercial banks, if any, promote public awareness of the deposit insurance system, as well as how the system works, including its benefits and limitations.

  2. Public awareness should, among other things, educate the public on the financial instruments and institutions covered by deposit insurance, the coverage and limits of deposit insurance and the reimbursement process.

  3. The deposit insurer should work closely with member banks and other safety-net participants to ensure consistency in the information provided to consumers and to maximize public awareness on an ongoing basis.

  4. The deposit insurer should receive or conduct a regular evaluation of the effectiveness of its public awareness program or activities.

Description

a. Deposits in the state bank are fully guaranteed by the state. In August of 2011, a law was passed creating a general insurance scheme for losses by individuals that result from the bankruptcy or other liquidation of a bank or MDO. The Fund has been organized and staffed and is now at the stage of building up its resources through periodic obligatory payments by banks and MDOs and creating the procedures for payment of insured amounts in the case of necessity.
b. The law on deposit insurance clearly creates and identifies the Deposit Insurance Fund as the organization responsible for the insurance scheme, the types of accounts that may be insured, the limit of the coverage (7000 Tajikistan somoni), the participants/contributors to the Fund, and the events that will trigger a payout (b(i) and b(iii)-b(vi), above) According to the law, only interest-bearing deposits – “savings” deposits – of natural persons are covered, leaving non-interest-bearing deposits uninsured. Deposit Insurance Fund staff indicated that this definition currently includes the payments accounts of individuals, since small amounts of interest are currently paid on the funds in those accounts. Should banks cease to offer interest on those accounts, the language defining which accounts are insured would result in a loss of deposit insurance for those accounts. This has the potential to create confusion among consumers about what accounts are covered and fairness concerns in relation to the protection provided to individual account holders.
A lack of clarity in the language of the law’s provisions on exceptions to insurance payouts may also leave questions about which consumers are actually insured by the law and when a payout will be made (b(ii)). These questions are also reported by the Fund to be causing difficulty in building up the required amounts for the insurance fund and in administering contributions in an efficient manner.
With respect to the administration of contributions, the interpretation of Article 24 of the law, which defines payment exceptions (instances in which insurance will not be paid on an account) and its relationship to Article 16, defining quarterly payment obligations of banks, may need clarification. Currently, banks are interpreting the obligation to pay quarterly contributions as a percentage of insured amounts as applying only to accounts that do not fall within Article 24’s exceptions. They are undertaking a complicated accounting procedure to first subtract all of the accounts that may fall under Article 24 (as these are not considered by the banks to be insured), and then applying the quarterly payment obligation to the remaining accounts (thus reducing the amount of the quarterly payment). Application of these exceptions requires analysis of not only the legal but also the beneficial ownership of accounts, the existence and current size of security interests, and other matters that are subject to change and may not be well documented. The resulting amount is difficult for the Fund to confirm as correct and there have been a number of disputes and some instances of banks submitting and then withdrawing their calculations and payments on the grounds that errors have been made and recalculation is required. To the extent that these complications prevent the Fund from amassing the required insurance funds and from maintaining them in an efficient and legally certain manner, they may threaten the Fund’s ability to function.9

Exceptions in the law are also likely to be difficult for consumers to understand and for Fund administrators to interpret. For example, savings that “according to a conclusion of the NBT facilitated the decline of the financial position” of the bank are exempted from payout under the insurance scheme. There is no indication of the basis on which NBT is to make that determination. In common international practice, this exception would be clearly limited to savings that were subject to specially advantaged rates or other special conditions that were beneficial to the client and injurious to the bank. Moreover, concern over such payouts is reduced where the insurance ceiling is low, as in Tajikistan’s new law, since the specially advantaged saver can receive a maximum of the low ceiling amount.


Similarly, savings that are subject to any security interest (not a security interest in favor of the failing bank, which is covered separately) are also exempted from insurance payments. While this is sometimes done in international practice, the intent is to allow the amount serving as security to be properly transferred in a manner that protects both the account holder and the rights of the holder of the security interest. There does not appear to be a procedure for this to occur, however, and in its absence the exception may result in unfair treatment of some consumers. Those consumers will lose their entire deposit, regardless of whether they are current on the obligation it secures, and may be forced into default on that obligation by the loss.
Procedures for Fund payouts in the event of a triggering event are still being developed and cannot yet be said to be efficient and reliable (b(vii)).

c.- f. Neither banks nor the Fund and regulator are yet undertaking general campaigns to inform customers about the existence of the Fund and the nature and extent of insurance on interest-bearing accounts. This is quite appropriate at present, since the Fund has not yet built up its assets to the required levels and is still developing the procedures by which it will make payments on the insured accounts. It does not appear that the Fund is yet in a position to execute its functions effectively, placing the reliability of the insurance it provides in question until these issues are resolved. As the Fund becomes established, however, banks will need to inform their customers about the Fund and the limits on its insurance. In order for this information to be communicated clearly and to avoid any confusion concerning the possibility that different banks are offering different terms of guarantee, it may be appropriate for the NBT, guarantee fund and/or banking association to develop model language for the notations to be included on bank advertising materials and the longer explanation that should be provided to customers opening accounts.

Recommendation

The definition of which accounts are covered by deposit insurance should be revised to include all consumer accounts (accounts held by natural persons), whether interest bearing or not. This will avoid confusion concerning what is insured and simplify Fund calculations.

The provisions of the law on deposit insurance should be reviewed and amendments proposed with an eye toward the clarification of the payout exceptions in Article 24 and of their relationship to the quarterly payments made by banks under Article 16. The goals of such amendments should be twofold: (1) clarification of the exceptions so that they can be easily understood by both consumers and Fund administrators and are fair to all depositors; and (2) definition of contributions such that they can be quickly and efficiently calculated and administered and do not result in large scale accounting tasks or protracted disputes.

As the Fund becomes established, banks will need to inform their customers about the Fund and the limits on its insurance. In order for this information to be communicated clearly and to avoid any confusion concerning the possibility that different banks are offering different terms of guarantee, the NBT, guarantee fund and/or banking association should develop model language for the notations to be included on bank advertising materials and the longer explanation that should be provided to customers opening accounts.

To the extent that the NBT or other bodies undertake consumer financial literacy surveys or consumer financial education efforts, information on the existence of deposit insurance and its basic features should be included. This may help to increase the willingness of small savers to place their funds in banks.



Good Practice F.2

Insolvency

  1. Depositors should enjoy higher priority than other unsecured creditors in the liquidation process of a bank.

  2. The law dealing with the insolvency of banks should provide for expeditious, cost effective and equitable provisions to enable the maximum timely refund of deposits to depositors.

Description

a.-b. In the event of the liquidation of a bank (or other credit organization), the Law on the Liquidation of Credit Organizations defines the priority for payment of creditors claims. As a form of protection of banking customers, it is common for such laws to provide for a high priority for depositors’ claims. These are usually subordinate only to the immediate expenses associated with the bankruptcy procedure itself and wages owed to employees of the bank. Article 35 of the Law on Liquidation of Credit Organizations, however, makes all claims of depositors that are not subject to payment by the Fund subordinate to the repayment of monies provided by the Government or by the NBT to the bank in question. Provision of such monies seems likely to be a common occurrence in relation to a bank that has been on the edge of solvency for some time, so this provision is, in practice, likely to prevent depositors from recovering more than the limit of insurance in many if not all cases.


Recommendation

The law “On the Liquidation of Credit Organizations” should be amended to give depositors priority over repayment of monies provided to a bank by the Government or NBT. Exceptions to this rule may be appropriate for bank owners or stockholders that hold deposits in the bank.




Yüklə 308,89 Kb.

Dostları ilə paylaş:
1   ...   4   5   6   7   8   9   10   11   ...   15




Verilənlər bazası müəlliflik hüququ ilə müdafiə olunur ©genderi.org 2024
rəhbərliyinə müraciət

    Ana səhifə