Table of Contents

1.0 Introduction........................................................................................................................3

2.0 About Ombudsman for Financial Services (OFS) and SIDREC...................................3

3.0 Comparison of Ombudsman for Financial Services (OFS) and SIDREC....................4

3.1 Jurisdiction......................................................................................................................4

3.2 Dispute Resolution Scheme............................................................................................5

3.2.1 Ombudsman for Financial Services (OFS)............................................................5

3.2.2 SIDREC....................................................................................................................5

3.3 Dispute Resolution Process............................................................................................7

Ombudsman for Financial Services (OFS)........................................................................7

Securities Industry Dispute Resolution Centre (SIDREC)...............................................7

Mandatory Scheme...............................................................................................................7

Voluntary Scheme................................................................................................................7

3.4 Conclusion.......................................................................................................................8
Compare and contrast the ombudsman (BNM) and SIDREC (SC) alternative dispute
resolution mechanisms by going through both their 2020 annual report. For the annual
report check the BNM and SC websites.

1.0 Introduction
Ombudsman for Financial Services (OFS) and Securities Industry Dispute Resolution
Centre (SIDREC) are dispute resolution body in Malaysia. They are formed from different
law and jurisdiction between each other. Ombudsman or OFS is an alternative dispute
resolution body, and was incorporated on 30 August 2004 and commenced its operations on
20 January 2005, while SIDREC was officially launched on 19 January 2011. From this
establishment date, it is clear that OFS was established first before SIDREC. Thus, this
paper will discuss alternative dispute resolution mechanisms by comparing and contrasting
the Ombudsman for Financial Services (BNM) and SIDREC (SC) alternative dispute
resolution mechanisms by going through both their 2020 annual report.

2.0 About Ombudsman for Financial Services (OFS) and SIDREC

An Ombudsman is an independent person or body who addresses and resolves

disputes fairly and speedily away from the courts or any other legal means. Ombudsman for
Financial Services (OFS) was formerly known as the Financial Mediation Bureau.  It was
approved by the BNM pursuant to the Financial Services Act 2013 and the Islamic Financial
Services Act 2013.  As a company limited by guarantee, OFS is a non-profit organisation
that acts as a dispute resolution channel to resolve disputes between Members who are the
financial service providers (FSPs), licensed or approved by Bank Negara Malaysia (BNM)
and financial consumers. The core objective of OFS is to provide an effective, independent
and impartial dispute resolution channel between financial consumers
and FSPs whilst upholding the six guiding principles which underpin the scheme of
independence, fairness and impartiality, accessibility, accountability, transparency and
effectiveness.

SIDREC is mandated by the Securities Commission Malaysia (SC), under the Capital
Market and Services (Dispute Resolution) Regulations 2010 as a dispute resolution body to
handle disputes involving monetary claims made by individual investors or sole proprietors
against capital market intermediaries, who are Members of SIDREC. SIDREC Members are
holders of a Capital Markets and Services Licence (CMSL) or Registered Persons under the
CMSA who are authorised to carry out dealings in securities, derivatives and private
retirement schemes (PRS) as well as fund management services. They include banks,
brokers, unit trust management companies (UTMCs), fund managers (excluding Real Estate
Investment Trusts (REITs) managers who only manage listed REITs), PRS providers and

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distributors and two Development Financial Institutions (DFIs). SIDREC provides retail
investors and SIDREC Members with a specialist avenue to resolve monetary disputes
between them in an independent and impartial manner through mediation and adjudication.

3.0 Comparison of Ombudsman for Financial Services (OFS) and SIDREC

3.1 Jurisdiction

Ombudsman for Financial Services Securities Industry Dispute Resolution

(OFS) Centre (SIDREC)

Financial Services Act 2013 Capital Market and Services (Dispute

Resolution) Regulations 2010
Islamic Financial Services Act 2013

Under the Financial Ombudsman Scheme i. SIDREC’s dispute resolution

(FOS), OFS only accepts disputes related services are free for investors with
to direct financial loses that fall within the disputes involving claims up to
following limits: RM250,000 under its Mandatory
Scheme.
i. Banking and Islamic banking ii. SIDREC accepts disputes involving
products and services/insurance claims above RM250,000, where
and takaful claims with monetary both parties agree to use SIDREC’s
limit of RM250,000. services under its Voluntary
ii. Motor third party property damage Scheme.
insurance/takaful claims with iii. SIDREC accepts court-referred
Monetary Limit of RM10,000 mediation under its Voluntary
iii. Unauthorised transactions through Scheme.
the use of designated payment iv. SIDREC’s dispute resolution
instruments or a payment channel services to investors is nationality
such as internet banking, mobile neutral, and are available to both
banking, automated teller machine Malaysian and foreign clients/
(ATM), or unauthorised use of a customers of SIDREC Members.
cheque with Monetary Limit of
RM25,000

BNM issued the Guidelines in Financial

Ombudsman Scheme 2015. This guideline
sets out the parameters of the designated
FOS. The Guidelines have excluded 11
types of disputes.

Time limit for the reference of a dispute to No time limit.

FOS after the date of final response from
the FSP is six months.

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3.2 Dispute Resolution Scheme

3.2.1 Ombudsman for Financial Services (OFS)

OFS adopts a two-stage dispute resolution process comprising Case Management

and Adjudication stages.

At the Case Management stage, Case Manager will try to resolve the dispute through
mediation and, if no settlement is reached, the Case Manager will issue a recommendation.

If either party disagrees with the recommendation, they may refer the matter to the
Ombudsman for Adjudication. The Ombudsman will review the dispute independent of the
Case Manager’s findings and issue a Decision.

I. Each dispute is viewed independently and with impartiality.

II. OFS does not ‘take sides’.
III. All facts and evidence provided by the financial service provider and the complainant
are weighed carefully before a fair and reasonable resolution is proposed.

If the complainant accepts the final Decision, the Decision is binding on the
complainant and the financial service provider.

If the complainant does not accept the Decision, they are free to pursue their claim
through any other legal means, such as the court of law.

3.2.2 SIDREC

Mandatory Scheme

A Member is obliged to participate in SIDREC’s dispute resolution process under the

Mandatory Scheme if the dispute meets the following four criteria:

I. The dispute is against a SIDREC Member;

II. The claimant is an individual investor or a sole proprietor;
III. The dispute involves a capital market product or service purchased from or offered
by a SIDREC Member or its representative; and
IV. The claimant’s monetary claim does not exceed RM250,000;

SIDREC’s dispute resolution service is free to the investor.

Voluntary Scheme

SIDREC may also mediate and adjudicate disputes involving investment-related

monetary claims under its Voluntary Scheme.  A Member is not obliged to participate in
SIDREC’s dispute resolution process under the Voluntary Scheme.  SIDREC will only accept

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a case under the Voluntary Scheme if both the claimant and Member agree to seek
SIDREC’s assistance.

There are two components to the Voluntary Scheme:

I. Disputes involving claims exceeding RM250,000

II. Court-referred mediation for any claim amount.

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3.3 Dispute Resolution Process

Ombudsman for Financial Services Securities Industry Dispute Resolution

(OFS) Centre (SIDREC)

Complaints received via letter, fax, Mandatory Scheme

walk-in, calls, or emails. If the complaint is
i. If parties agree to a settlement
within the scope of OFS, then the dispute
through SIDREC’s mediation
will be registered.
process, a settlement agreement will
i. Mediation process; negotiation, be entered into and both parties will
mediation, or conciliation. be bound by the agreement;
ii. The dispute is settled within 3
ii. If mediation fails, the matter will
months from receipt of full
proceed to adjudication unless the
documents if the FSP and
investor withdraws his or her claim;
Complainant mutually agree to
settle. iii. If the matter proceeds to
iii. If not, there will be a adjudication, the Member is required
recommendation settlement by the to participate; and The Member is
case manager within 30 days. bound by the decision of the
iv. The dispute will be settled if the FSP adjudicator should it be accepted by
and Complainant accept the the claimant.
Recommendation within another 30 iv. The claimant has the choice to
days. reject the adjudicator’s decision and
v. If not, the case will proceed to pursue other legal recourse.
adjudication in which it will be However, once the claimant accepts
reviewed by the Ombudsman. the decision of the adjudicator and
vi. The board will reach its final enters into a settlement agreement,
decision within 14 days from receipt the claimant will be bound by the
of full documents. decision.
vii. Within 30 days after the final
decision is given by the Voluntary Scheme
Ombudsman, the Complainant i. If parties agree to a settlement
needs to decide whether to accept through SIDREC’s mediation
or reject the Decision. process, a settlement agreement will
viii. If the Decision is rejected, then it is be entered into and both parties will
not binding on FSP and
be bound by the agreement.
Complainant. Complainant may
seek other avenues for redress. ii. If mediation fails, parties may
ix. If the Decision is accepted, then it is choose to proceed to adjudication, if
binding on FSP and the they both agree to do so.
Complainant.
iii. If a claim is adjudicated under the
Voluntary Scheme, both the
claimant and the Member will be
bound by the decision, as both
parties have contracted to resolve
their dispute via this avenue.
iv. Both parties will be required to pay a
reasonable fee for SIDREC’s
dispute resolution services.

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3.4 Conclusion

In conclusion, there are a lot of similarities between OFS and SIDREC in terms of the
dispute resolution process. However, there is a significant difference in terms of jurisdiction
between the two bodies, and also difference in their schemes.

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