ISLAMABAD, Aug 22: Consumer Rights Commission of Pakistan (CRCP) has regretted the delay in the appointment of banking ombudsman of Pakistan.

The first banking ombudsman completed his three-year term on April 30 this year. Since then, the position of the banking ombudsman has been lying vacant with no signs of any replacement, the commission said.

The banking sector has witnessed a phenomenal growth in Pakistan in the last couple of years. This is because of the privatization, deregulation and liberalisation policies of the government over the years. Many local and foreign banks have been opening their branches in all parts of the country. The banks have been dealing more in consumer financing after 9/11 when banks received greater remittances and their liquidity went up. Since then, banks have been offering different consumer products like credit cards, ATM cards, auto loans, mortgage loans and personal loans. The annual report 2007 of the banking ombudsman shows a sharp increase in consumer complaints as 1,580 formal and 2,029 informal complaints were received during the year. These figures show the importance of the institution of the banking ombudsman as a grievance-redress mechanism for consumers of financial services.

Since consumer financing is a very sizeable chunk of commercial banking, consumers have serious grievances of services/products of different banks in Pakistan, like issues of the interest rate spread, variable interest rate, inflationary impact, deteriorating quality of services, lack of consumer education, poor information disclosure practices, intimidating recovery practices and weaknesses in regulatory framework.

One of the redress mechanisms for the consumer complaints and grievances is banking ombudsman. The law for the appointment of the banking ombudsman was made in 1997, however appointment to the post was made in late 2004 and it became functional on May 2, 2005. “It is regretful that this important office is lying vacant for the last four months,” states an official statement of the commission.