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The Need for a Banking Ombudsman in Mauritius

• Siv
  WORTELS LEXUS

Banking story in Mauritius started in early 19th century. Many banks closed their doors or were taken over by others. The 19th Century witnessed three banks, now defunct, which operated under the name Bank of Mauritius. In 1838, the Mauritius Commercial Bank Ltd was established by traders and is still present over the years. Our first Banking Ordinance dates back to 1958 (ordinance no 1 of 1958) whereas our Bank of Mauritius Ordinance came after, in 1966 (Ordinance no 43 of 1966)
To day, we have more than 20 banks operating in Mauritius and the status of the people with whom they are doing business, the nature of the transaction, the security offered have evolved towards a more stringent and regulated environment.
Legislations are keeping the pace with the creation of new banks with the added complex banking environment. Job creation is generated; the profits on foreign exchange are increasingly favoring the investors. What is being done to cater for the protection of the customers be it international or local ones?
My research work leading to the completion of a book entitled ‘’Guide to decisions of the Supreme Court of Mauritius affecting Banking (1861 – 2007)’’ has offered me the opportunity to gauge the problems which people has been encountering over the years when they deal with the banks. Their only recourse when solving problems has been to turn towards the courts where magistrates and judges are called upon to adjudicate on their respective rights. Unfortunately it is not free!
Bank customers use to contend that they are charged with abusive rates of interest and they believe they know their rights whereas on the contrary it’s not the case.
Is it not high time to establish a Banking Ombudsman in Mauritius to take care of banks’ customers in respect of whatever contention they might have against their bank? The Borrower Protection Act, which came into operation on the 7th March 2007, caters only for credit agreements not exceeding Rs 2 million and as such it is not wider in its scope so as to cover other services offered by a bank.
What is a Banking Ombudsman?
A Banking Ombudsman is an independent official who investigates the complaints of individuals against banks. It will operate as a complaint desk. Whether it will apply to Category A or B licensed banks will be a matter for discussion in the local context.
It is a quasi judicial authority which will enable resolution of complaints of banks’ customers relating to certain services rendered by the banks. It will be a free service for customers who have exhausted negotiations with their bank.
How will the Banking Ombudsman fit within the Mauritian banking system?
The assistance of the Law Reform Commission will be enlisted to work out a Banking Ombudsman Scheme as is obtained in India and in England. To give effect to that scheme banks will be requested to adhere thereto with an undertaking to abide.
Provisions of law should be made so that such scheme evolves in collaboration with the Central bank for the purpose of obtaining certain data in respect of the banking transactions so complained. This office should comprise of lawyers and accountants among others.
What would be the end Result?
• Lesser cases will go to courts
• Customers’ pain will be lessened
• Cost effectiveness: both for government and individuals
• Time saving: both for the government and individuals
• More appropriate judgments due to specialisation
• Less wealthy individuals will beneficiate from legal fees of barristers and attorneys
• Creation of employment
• Encourage customers who is feeling discriminated or being cheated on to take legal actions against their banks as the process will be cost effective and time effective.
As the recommendations will be more accurate and appropriate, banks will be discouraged to offer poor services or to contravene the law.

Potayya, S. 2011, The Need for a Banking Ombudsman in Mauritius.