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     FrontPage Edition: Thu 1 September 2005

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Financial Industry Disputes Resolution Centre launched

Source: www.mas.gov.sg

Opening Remarks by Mr Heng Swee Keat, Managing Director MAS, at the Launch of the Financial Industry Disputes Resolution Centre (FIDReC), 31 August 2005

An Excerpt

Hitherto, disputes relating to banking matters have been dealt with by the Consumer Mediation Unit (CMU) while those relating to insurance are handled by the Insurance Dispute Resolution Organisation (IDRO). These schemes have worked well.
However, we are now witnessing the launch of more new financial products that cut across traditional boundaries of banking, insurance and capital markets.
In addition, as we step up our efforts to encourage greater participation in financial market, more retail investors will enter the market.
To keep up the confidence of investors, apart from a greater focus on investors' education, we need to provide a simple and cost-efficient way to handle disputes.
I am therefore pleased that the industry has come together to create FIDReC, by merging the Consumer Mediation Unit (CMU) and the Insurance Dispute Resolution Organisation (IDRO). Capital markets disputes will also, for the first time, be brought under a dispute resolution scheme.
MAS fully supports this initiative, and has provided funding for the set-up cost from the Financial Sector Development Fund. The recurrent cost will be borne by the industry, in proportion to the usage of the resources of the scheme.
FIDReC's governance structure, membership and terms of reference were finalized after public consultation. FIDReC will be governed by a Board of 7 Directors, of whom one each will be from the banking, insurance and capital market sectors.
FIDReC will be chaired by a very eminent and public-spirited individual, Mr Goh Joon Seng, former Chairman of CMU and IDRO, and a former Supreme Court Judge.
FIDReC will use mediation as the main way of resolving disputes. Mediation involves having an impartial third party to resolve the disputes in an amicable, consultative way.
Statistics from CMU and IDRO show that about 95% of disputes are resolved through mediation. If mediation fails, the dispute then enters into adjudication.
FIDReC has 3 important features to enable it to serve as an effective dispute resolution body.
First, by handling all disputes that relate to forms of financial transactions, it provides consumers the convenience of a one-stop centre.
Second, FIDReC is staffed with independent professionals including former judges, lawyers and industry professionals who understand the business practices and nature of products in the financial industry.
Third, FIDReC is affordable. To ensure easy access, mediation services will be free. If current trend continues, it means that 95% of all cases handled by FIDReC will be free. Should adjudication be needed, consumers will pay just $50.
The setting up of FIDReC is a strong signal of the industry's commitment to enhance fair dealing with its customers and raise the standard of professionalism.
As of today, more than 380 financial institutions have subscribed to FIDReC.

Full Text of Speech

Source: www.mas.gov.sg Press Release 31 Aug 2005

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