Do you know your Terms of Use and what to do when you have a dispute in your hands?

by Edmund Yong

[Continued from Part 2]

G. KNOW YOUR TERMS

How an exchange responds to error trades is stated in their Terms of Use (TOU). Here is a comparison of Luno with other global platforms Coinbase (outside USA) and Binance.

Note: Only Luno is fully operational in Malaysia and authorized by the Securities Commission to accept new customers at time of writing. The terms (italics added) are extracted from the respective websites on Jan 3, 2020.

H. IS SIDREC AN OPTION?

What other option is there for customers who are dissatisfied with the DAX’s complaint handling process, and do not want to litigate i.e. spend time and money to go trial? There is an alternative dispute resolution channel under the auspices of regulators. But does it cover DAX?

The Securities Commission has an approved body called the Securities Industry Dispute Resolution Center (SIDREC) to facilitate capital market–related disputes involving monetary claims by investors against its members. It is similar to the Financial Mediation Bureau, renamed as Ombudsman for Financial Services, set up by Bank Negara Malaysia to mediate banking and insurance-related complaints between financial institutions and the consumer public.

SIDREC’s service is free for retail investors for claims not exceeding RM250,000 and enables them to have access to redress through a fair and independent expert platform. The claimant can choose to accept the decision of the SIDREC adjudicator or pursue other legal recourse. Accordingly, once the claimant accepts the decision, he or she will be bound to enter into the settlement agreement and award prescribed.

For claims above the amount of RM250,000, it is subject to a reasonable fee and requires the agreement of both parties to use SIDREC’s dispute resolution service under its Voluntary Scheme. This scheme also permits legal counsels of both parties to participate in the process. There are instances where the Courts refer cases to SIDREC for mediation.

SIDREC members comprise of capital market intermediaries and those who are authorized by SC to deal in securities and undertake fund management. Generally, they include commercial banks, stockbrokers, fund managers, distributors, financial advisers, among others, who are licensed under the Capital Market and Services Act (CMSA) to conduct regulated activities in Malaysia.

Furthermore, SIDREC members must participate in SIDREC’s dispute resolution process should an investor lodge a dispute against any of them. Nonetheless, one is advised to lodge a formal complaint to the SIDREC member concerned first before escalating to SIDREC.

According to its annual report, SIDREC received 440 claims and enquiries in 2018. More than 90% of the eligible claims going through SIDREC’s dispute resolution were resolved through case management and mediation. The turnaround time for resolution is within 90 days from receipt of claim and documentation from both parties, though this may be extended at SIDREC’s discretion depending on the nature of the case.

Having said that, it appears that there are no DAX operators listed as SIDREC members. We are informed by the SIDREC office when we enquired that it handles matters regarding shares, bonds, warrants, unit trusts and private retirement schemes, but not cryptocurrencies at this stage. Given the success of SIDREC, this could be something for policy makers to consider in the future should the need justifies.

Important Disclaimer: Please do not rely on this article in any form as legal advice. It has been prepared for general information purpose only and is not a substitute for legal advice. You must consult a qualified lawyer for your own situation.

 

Acknowledgments: Faisal Moideen for taking time out to do this interview. He can be reached at +603-6205 9288. Also to my late professor Wickrema Weerasooria of Monash University who practically wrote the textbook on banking law in Australia.