Implementation of Dispute Settlement Provisions of the Financial Consumer Protection Directive No. FCP/01/2020 in the Banking Sector
No Thumbnail Available
Date
2024
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
As is expected in any human interaction within a given societal setting, conflicts are bound to arise. This holds true for the interactions between consumers and their financial service providers. Consumer protection relies heavily on consumers having confidence that they will have access to redress in case issues arise in their transactions. Taking this into consideration, we examine the intentional provisions of laws established to address disputes that may arise from such interactions. The objective of this study is to investigate the practices and challenges faced in the implementation of financial dispute resolution by banks in Ethiopia. Many of the world's major financial hubs currently employ systems of financial dispute settlement. However, these systems inevitably encounter questions regarding their function and role in regulating financial markets, particularly as they expand and enhance their capacity to handle an increasing number of finance-related conflicts. The purpose of financial dispute resolution is to strive for a fair settlement through mutual agreement, while highlighting the benefits of reaching such an agreement, such as cost and stress reduction, as well as avoiding a lengthy legal process. This study adopted a mixed research approach, utilizing a descriptive research design method to collect and analyze both quantitative and qualitative data. The quantitative component of the study included 32 respondents from seven banks that have internal complaint handling units. Interviews were also conducted to gather information from senior staff of the National Bank of Ethiopia. The quantitative data sets were analyzed using descriptive methods, while a narrative approach was employed to examine the qualitative data. The findings revealed challenges in the implementation and resolution of disputes under the Financial Consumer Protection Directive No. FCP/01/2020. In conclusion, the study suggests potential solutions that stakeholders could consider when redesigning Ethiopia's framework for resolving financial consumer disputes. These recommendations aim to establish an efficient and effective dispute resolution system in the country.