Designing a sound GRM: Principles and International Experience

Sudipto Banerjee () and Aditi Dimri ()
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Sudipto Banerjee: National Institute of Public Finance and Policy
Aditi Dimri: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: Grievance redress mechanism (GRM) is an essential component of the consumer protection framework in the financial sector. Its presence and performance can have far-reaching effects on the participation of consumers in the financial sector. Using GRM a consumer can seek expeditious and fair remedy against the wrongs of the financial service providers. While there are various forms of GRM (both judicial and non-judicial), in this paper, we study the design of a non-judicial redress agency. Using first principles we study the design of a financial redress agency by focusing on the critical organisational decisions of - manner of establishment, governance, funding, dispute resolution processes, and performance evaluation. We build on two strands of literature, one studying the GRM design at a conceptual principles level and the other providing practical guidance for setting up a redress agency. Further, the paper analyses four different redress agencies, namely, - Financial Ombudsman Services Scheme in the U.K., Kifid in the Netherlands, Consumer Financial Protection Bureau in the U.S., and Insurance and Financial Services Ombudsman Scheme in New Zealand. The paper contributes by assimilating all the varied resources to map principles, decisions, and case studies to provide an accessible yet comprehensive introduction to designing a GRM for a varied readership.

Keywords: GRM; redress agency; financial ombudsman; dispute resolution; consumer protection in finance (search for similar items in EconPapers)
Pages: 79
Date: 2022-01
New Economics Papers: this item is included in nep-ban and nep-his
Note: Working Paper 366, 2022
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