With eight different ombudsman offices, the question arises as to the necessity of this multitude. Jennifer Lygren from FINSOM explains.
Since 1 January 2020, financial service providers in Switzerland have been obliged to join an ombudsman's office recognized by the Federal Department of Finance (FDF). The introduction of eight different ombudsman offices has raised questions among financial service providers. We spoke to Ms. Jennifer Lygren, Director of the FINSOM ombudsman's office, to find out more about the need for this multitude of ombudsman's offices.
What should the ombudsman's offices under the Financial Services Act (FinSA) actually do?
The FinSA ombudsman's office should primarily deal with complaints from private customers who are dissatisfied with the complaints management of a financial services provider. Under certain conditions, it can also carry out mediation under civil law. It should also contribute to public information and market surveillance. Furthermore, it is important that it acts as a neutral mediator between financial service providers and their customers in order to promote trust and transparency in the financial sector.
How has the financial services ombudsman landscape evolved since January 1, 2020?
Before FinSA came into force in 2020, the Swiss Banking Ombudsman was the only ombudsman specialized in financial services. It has been responsible for handling complaints about members of the Swiss Bankers Association (SBA) since 1993, although only 10% of the complaints handled in 2018 concerned financial services. With the adoption of FinSA in June 2018, the need to set up at least one additional ombudsman's office for financial services became clear. However, this led to the creation of nine ombudsman offices for "financial services" as defined by FinSA in 2020. Of the nine ombudsman offices recognized in 2020, one disappeared after two years, leaving eight in existence today.
How many complaints and mediation proceedings involve independent asset managers among the eight FinSA ombudsman offices?
It is not easy to produce a consolidated analysis of the ombudsman's office statistics. Nevertheless, publicly available statistics show that there are currently on average fewer than 200 complaints per year for an FinSA ombudsman service. Of these, less than 50% end in mediation or 'conciliation'. It is notable that civil complaint and mediation rates do not appear to be higher for financial services providers, including independent asset managers, than for other industries in the financial sector. Complaints about fraud and identity theft committed from abroad appear to be more common.
What are the advantages or disadvantages of this high number of ombudsman offices?
Choice is often seen as an advantage, but "too many options can be overwhelming and make the choice difficult". It is also difficult to compare ombudsman services quickly. One disadvantage would be cost inefficiency. In addition, the multitude of ombudsman schemes could lead to confusion for financial service providers and especially for customers, as they are not sure which ombudsman scheme is the most suitable for their specific needs.
What is the situation in neighboring countries?
According to a 2012 study by the World Bank, competition between ombudsman offices in Switzerland is one of the few exceptions.
In your opinion, does the number of FinSA ombudsman offices meet the needs of the Swiss financial sector?
The number of FinSA ombudsman offices does not seem to me to meet the needs of either independent asset managers in Switzerland or the financial sector in general. There is a risk that an excessive number of ombudsman offices will impair the efficiency, effectiveness and transparency of the system.
Why are there so many ombudsman offices for financial services?
Good question. The answer lies neither in the needs nor in the interests of financial service providers or the Swiss economy.
Finally, we would like to thank Ms. Jennifer Lygren for this insightful interview.
It would be desirable for the regulator to publish the number of cases handled by each ombudsman's office in future in order to ensure greater transparency and clarity in this area.