Financial Dispute Resolution Scheme (FDRS)
Objectives
A customer having a dispute with a financial institution involving monetary loss may lodge a complaint with the relevant financial institution or report the case to the regulators such as the Hong Kong Monetary Authority (HKMA) or the Securities and Futures Commission (SFC). While the regulators may examine the conduct and practices of the financial institution, they do not adjudicate on any financial remedy for the customer. Hence, the customer may have to take the monetary claim through the court system.
The objective of the FDRS is to provide customers with an alternative avenue which is independent and affordable for resolving monetary disputes with the financial institution amicably and in a timely manner by way of primarily “mediation first and arbitration next”.
Membership
The FDRS is administrated and operated by the FDRC. A major feature of the scheme is that all financial institutions which are authorized by the HKMA or licensed by/registered with the SFC (except those institutions which only provide credit rating services) are required to join the scheme as members, such that they are obligated to enter into mediation and arbitration in respect of an Eligible Dispute. There are more than 2,000 financial institution members of the FDRS.
Who are eligible to use services under the FDRS ?
In accordance with Terms of Reference (Jan 2018), an Eligible Claimant is an individual, a sole proprietor or a small enterprise (SE)* who:
- had/has customer relationship with a member of FDRS; or
- has been rendered any financial services by any member of FDRS.
* SE means a limited company or a partnership, and in accordance with SEs or its groups latest financial year end statement has:
- an annual turnover not exceeding HK$50 million; and
- gross assets not exceeding HK$50 million; and
- not more than 50 employees in Hong Kong.
In accordance with Terms of Reference (Feb 2014), an Eligible Claimant is an individual or a sole proprietor.
Disputes that can be brought before the FDRC is one which:
- involves an Eligible Claimant (”EC”) and a member of the FDRS;
- is of monetary nature;
- must arise out of a contract between the EC and the FI that was entered into or arose in Hong Kong, or any act or omission of the FI in connection with the provision of a Financial Service to an EC where the FI acted as an agent.
In accordance with Terms of Reference (Jan 2018), the FDRC may handle claims whose date of first knowledge of loss by the claimant falling on or after 1 Jan 2018. The terms in relation to Small Enterprises are effective from 1 Jul 2018.
The claim may be up to HK$1,000,000 and/or within the 24 months limitation period from the date on which the claimant first had knowledge of his/her loss.(”Standard Eligible Disputes”)
Subject to the parties’ consent, the FDRC may handle cases with a claim exceeding HK$1,000,000 and/or beyond the 24 months limitation period. (”Extended Eligible Disputes”)
Terms of Reference (Feb 2014) applies for claims from individuals or sole proprietors, whose first knowledge of loss before 1 Jan 2018. The maximum claimable amount is HK$500,000 and the limitation period is 12 months.
FDRC’s criteria for accepting and rejecting applications is set out more fully in the FDRS Guidelines on Intake Criteria of Cases (2014) and FDRS Guidelines on Intake Criteria of Cases (TOR 2018)
You are welcome to attend our Free Public Enquiry Meeting by appointment. During the Free Public Enquiry Meeting, the enquirer would get to know more about our services and how mediation and/or arbitration can help to solve their dispute.