The FOI Resolves Financial Consumer Disputes and Protects Financial Consumers

Establishment of the Dispute Resolution Scheme
The Financial consumers or Financial Service Enterprises (FSEs) have no wish to see disputes in their transactions. Nevertheless, the FOI still received more than 4,000 financial consumer complaints in 2014. In banking and securities transactions, most disputes are related to business solicitation. For example, some sales personnel of banks or securities firms may fail to fully and accurately disclosure to consumers the risks or nature of financial products such as investment-linked products or derivatives that they sold.
As the FOI Ombudsman Committee Chair and President Kuan-Chun Johnny Chang points out, nearly 90 percent of the cases accepted by the FOI are insurance disputes. Apart from those arising from business solicitation, the most disputes are related to insurance claims, such as disputes on the scope of coverage, determination of degree of disability, or determination of causation in medical insurance policies. "During the negotiation of a dispute involving an insurance claim, it often goes beyond the ability of the insured or beneficiary to determine or prove a given fact. If a complaint is filed, the FOI will render an ombudsman decision after taking proper account of the factual circumstances or obtaining the opinions of expertise consultants."
For example, the FOI once handled a case in which the complainant's insurance contract was rescinded by the insurer, which asserted that the complainant did not disclose in the insurance application a previous cancer of the same kind for which the complainant had been undergoing follow-up examinations for a number of years. Upon investigation, however, the FOI found that the cancer had been cured five years earlier and no cancer had been found since, so the complainant did not violate the obligation to disclose in the proposal that "During the last five years the insured has suffered from cancer." The FOI reached a decision that the rescission of the contract was against the law, and the insurer accepted the ombudsman decision.

Reducing Financial Consumer Disputes
Many financial consumer disputes occur because consumers do not understand financial products. To reduce the likelihood of disputes, Kuan-Chun Johnny Chang urges consumers to carefully and fully familiarize themselves with the nature of financial products they attempt to buy, and closely examine the information provided by the FSEs and raise any questions with them. He also urges FSEs to faithfully perform their obligation to explain financial products in a way accessible to consumers, and to ensure whether a product is suitable for a customer through the due diligence process of KYC (know-your-customer) and suitability analysis, to reduce the occurrence of financial disputes.
The FOI's dispute resolution scheme and decisions can have the additional benefit of leading to improved quality of financial products and services. For example, FSE's should examine the common types of disputes that arise in connection with business solicitation, and focus on them in strengthening the training of their salespersons and improving the sales process. Furthermore, because insurance policies are standardized contracts which consumers can only passively accept, when there is any doubt over the interpretation of a clause, the FOI can adopt an interpretation favorable to the insured in accordance with the Insurance Act, the FCPA, or other applicable laws or regulations.
For example, the daytime hospitalization of mentally ill insureds was often determined by insurers as uncovered under old insurance policies. However, recent court judgments and FOI’s opinions have found daytime hospitalization to be within the meaning of "hospitalization" and indemnifiable by insurers. These determinations have led to an amendment to the official Model Provisions for Hospitalization Expense Insurance Policies, and to the requirement that daytime hospitalization be expressly excluded from coverage if so intended by insurers, resulting in clearer insurance policies.

FOI Provides Dispute Resolution in an Efficiency, Effectiveness, and Low Costed Manner
To help financial consumers secure their interests and to achieve the principle of "Fairness and Reasonableness," the current FOI procedures for the initiation of ombudsman cases require that a consumer first file a complaint with the FSE, either directly or with assistance from the FOI. If the FSE does not reply within 30 days, or if the consumer is not satisfied with the FSE's reply, then within 60 days from receipt of the reply, the consumer can apply to the FOI to initiate an ombudsman case.
"The earlier a dispute is resolved, the more efficient it is." Kuan-Chun Johnny Chang points out that the FOI initiates a mediation proceeding whenever a case formally enters the ombudsman process. If the consumer and the FSE come up with a mutually acceptable proposal, the dispute will be resolved satisfactorily. This is one goal the FOI is striving for. For example, in 2014 it achieved a successful mediation rate of nearly 50 percent. On the other hand, if mediation fails, the case enters the ombudsman proceeding. At that stage, three pre-examiners submit their pre-examination opinions for full discussion at a meeting of the Ombudsman Committee comprising 22 practitioners, scholars, and impartial persons. Then, a final ombudsman decision is rendered.
The FOI provides financial ombudsman services to consumers free of charge. Also, pursuant to the FCPA, the FOI is required to render an ombudsman decision within a period of three months after receipt of case, which can be extended by two months at most, meaning that all ombudsman cases must be closed within five months. The FSE must accept the FOI's ombudsman decision if the award is within a certain binding limit. The consumer also can submit the ombudsman decision to a court for an approval, and once approved, it has the same effect as a final and irrevocable civil judgment. Through these mechanisms, the ombudsman scheme achieves the objectives of efficiency, effectiveness, and low cost.

FOI Enhancement of Consumption Experience and Ombudsman Service Quality
Financial consumers can file complaints with the FOI by postal mail or at its service counter. The FOI also provides a toll-free phone number 0800-789-885 to serve them. The FOI is currently planning to work with legal services organizations in schools to provide more options to consumers seeking legal advice or aid. All organizations can apply to visit the FOI or request it to send instructors to their facilities to promote education and awareness. The FOI also conducts ongoing activities to promote sound financial consumption knowledge among the public through seminars, media publicity, and other channels in the spirit that "an ounce of prevention" is worth "a pound of resolution."
The FOI held financial awareness seminars for the third consecutive year. This year (2015) it launched nine circuit sessions in Taipei, New Taipei, Taichung, and Kaohsiung, where financial consultants and FOI instructors, through plain-language presentations and case studies, shared insight with the audience on what to look for when buying insurance, funds, and other financial products. They also explained the key mechanisms of the Truthful Advertising Obligation, the KYC (Know-Your-Customer) Suitability Analysis, and the Full Explanation and Risk Disclosure Obligation embodied in the FCPA. After these sessions, the audience knew better how to protect their own interests as financial consumers and avoid disputes.
Kuan-Chun Johnny Chang pointed out that the FOI has accumulated a wealth of experience through its extensive handling of financial consumer dispute cases. Using case statistics and analysis, the FOI can categorize cases and identify common types of dispute. These findings are useful in designing financial education and awareness programs and promoting public knowledge regarding financial consumption. Making such findings available for timely public review, and translating them into general case handling principles are important tasks to which the FOI will dedicate itself in the future, so as to enhance dispute resolution efficiency and complaint and ombudsman service quality.  

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