The FOI's First Successful Mediation of a TRF/DKO Dispute Case
The FOI's achieved its first successful mediation of a TRF/DKO (target redemption forward/discrete knock-out) dispute case on 30 November 2016, when both parties to the dispute appeared at the FOI and reached a reconciliation. In this case, the FOI arranged for the two parties to meet twice at its venue through mediation. Seeing that during the first meeting the two parties, although not in total agreement, came very close in their claims, to enable the dispute to be resolved, the FOI arranged for the second meeting, at which the dispute was successfully resolved through the mediator's coordination and both parties' high sincerity and willingness to concede and compromise.
To enable professional investors not regulated by the Financial Consumer Protection Act (FCPA) also have access to a dispute resolution scheme other than civil litigation, the Financial Supervisory Commission (FSC) on 15 April 2016 mandated the FOI to provide free-of-charge mediation services in assisting banks and consumers to resolve their disputes involving complex, high-risk derivative financial products (such as TRFs and DKOs).
When accepting an application for mediation of such a dispute, unless either party to the dispute declines to appear on-site for mediation, in principle, the FOI will try its best to arrange for the two parties or their representatives to meet at the FOI for on-site mediation. If the mediation resolution is declined, the FOI will, after considering the factual evidence produced by them and taking fair and reasonable account of all circumstances of the dispute, make mediation recommendations for their reference and consideration.
The FOI indicates that although in this type of dispute case the mediation recommendations are not binding on the parties, because the mediation is successful only upon their acceptance, the findings expressed in the recommendations are still useful for their further consideration and also are likely to be taken into reference or adopted by the court in the event of litigation. Hence, the FOI wishes to see such disputes resolved as early as possible through the FOI mediation platform. Use of this mechanism can enable all investors and financial services enterprises to resolve their disputes amicably and efficiently, to better maintain the stability and integrity of the financial markets.