Troubleshooter: Financial Ombudsman reports more consumer claims in 2011

Troubleshooter: Financial Ombudsman reports more consumer claims in 2011

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Financial Ombudsperson Piruz Sargsyan

The Financial Ombudsman’s Office handled more applications from consumers in 2011 than during the previous year, managing to nearly double the total amount of compensation paid to its applicants as a result.


The number of such claims was 803 (instead of 642 in 2010), while the total sum of compensation increased from some 29.3 million drams (about $75,000) in 2010 to 58.1 million drams (about $150,000) in 2011.

The Office of the Financial Ombudsman was set up in Armenia three years. It acts as a mediator in settling disputes between consumers and financial institutions and with its activities it also aims to promote public trust in the financial market.

The service provides mediation in disputes of citizens on one side and banks, insurance companies, hedge funds, pawnshops, and other financial organizations on the other.

“Our data shows that consumer confidence in the financial system grows,” says Financial Ombudsperson Piruz Sargsyan. “Today, people use financial services with greater confidence knowing that there is an agency that can mediate in settling their problems fast and without charging a fee for that.”

Most of the cases handled by the Financial Ombudsman’s Office in 2011 concerned banks. Sargsyan says complaints against banks were mainly related to loan transactions. Most complains against insurance companies predictably concerned mandatory car insurance that was introduced that year.

“When we first began our operation people would come to us with a variety of issues – from financial disputes with neighbors to divorce cases – the matters that have nothing to do with our service,” says Sargsyan, adding that they hardly ever have such applications now.

The Financial Ombudsman’s Office finds it very important that people in Armenia dealing with financial institutions become more knowledgeable on financial matters.

“We conduct trainings for schoolchildren, students and elderly people so that they have the basic knowledge about insurance, banking cards, bank deposit, loans,” says Sargsyan.

Based on precedents in its case handling the Financial Ombudsman’s Office also negotiates with financial institutions regarding possible changes in their work that would exclude similar complaints from citizens in the future.

“We had a few cases when financial institutions had a large number of clients with the same problem. Avoiding costly litigations, the financial institutions preferred negotiating with us over necessary changes in contractual terms,” says the ombudsperson.

Hranush Aghayan, the head of the Financial Ombudsman’s Office’s group in charge of receiving and assessing customer claim, says there has yet been no case when their service would decline to take up an applicant’s case and that applicant would later succeed in winning the case in court.

“There are cases that are outside our competence, such as claims by legal entities or a bank refusing to issue a loan to a physical person. Very few of those who turn to us with such matters later also go to court, as in most cases our arguments turn to be credible for them,” says Aghayan.

The Office explains that when having a problem a consumer should first turn to his or her financial organization. Only if no solution is given by the company, can the person seek the ombudsman’s mediation.

Aghayan says in more than four dozen cases in 2011 when disgruntled customers turned to the Financial Ombudsman’s Office first they were advised to turn to their companies and actually had their requests met by their respective financial institutions.