Over the years, consistently, the majority of our cases are resolved through case management and mediations, says CEO

By HABHAJAN SINGH

Securities Industry Dispute Resolution Centre (SIDREC) — the outfit set up nine years ago by the capital market regulator Securities Commission Malaysia (SC) — may have got its formula right. For a start, the alternative dispute resolution (ADR) body has been able to resolvea good number of cases coming its way.

“Over the years, consistently, the majority of our cases are resolved through case management and mediations,” SIDREC CEO Sujatha Sekhar Naik told The Malaysian Reserve.

That’s the first port of call for capital market products or services disputes involving monetary claims by individuals or sole proprietors against financial institutions like banks, brokers, fund management and unit trust management companies. When mediation fails, the dispute goes to adjudication.

There is also a shift in the awareness of investors who have come to SIDREC.

“The quality of claims coming to us is increasing. Many of the complainants now seem to better understand the help we provide and know why they are coming to us,” said Sujatha.

In 2018, SIDREC received fewer enquires when compared to the year before, but there was a slight increase in registered eligible complaints.

“We have found the quality of complaints to be far better in that they were relevant to SIDREC’s purview and demonstrated an understanding of issues they needed help in,” Sujatha observed in SIDREC’s 2018 annual report.

The report noted that SIDREC received 440 disputes and enquiries in 2018, comprising 83 eligible disputes, 269 enquiries and 88 ineligible disputes.

Even though the number was lower than the 628 registered in 2017, it received 83 eligible disputes in 2018, up 15% from the year before.

A further breakdown of the status of the eligible disputes managed by SIDREC as at end-2018 showed that 60 disputes were resolved at case management (47), mediation (11) and adjudication (2).

Success Rate

When asked what helped SIDREC in doing its job, Sujatha said it is down to the team at work at the ADR body and the commitment placed by SIDREC in ensuring there is ongoing focus on building their knowledge and skill sets necessary to do the work effectively.

For a start, she said all its case managers are trained mediators. Among others, they are trained and accredited by the Malaysian Mediation Centre, run by the Bar Council of Malaysia.

“It’s a compulsory requirement for them. They may not formally mediate, but they get the mediation training because it is so important in the way you approach your case. They are expected to adopt the mediative approach from the get-go,” she said.

The case managers will, among others, see if there are potential windows to resolve the matter. They look for underlying issues which are key to helping the parties resolve matters at hand.

“We try to understand the underlying issues for each side, their primary concerns, and what they want out of the process. We are not here to judge them,” she said.

Another key element is confidentiality, which is crucial to the whole process.

“Parties need to be comfortable that they can say and bring things to the table for the purpose of resolving the issues at hand, and nothing else. They need to be comfortable that the issues will not be broadcast outside or that
it is not a fishing expedition to go to the courts later,” she said.

In her remarks in the 2018 annual report, SIDREC chairman Datuk Ranita Mohd Hussein observed that the key to SIDREC’s role in investor protection is its firm, non-partisan stance in handling any financial claim against capital market intermediaries.

“SIDREC’s preferred approach is inclusive and balanced, aimed at establishing a process where confidentiality, openness and trust are observed at all times.

“The SIDREC process also encourages fact-finding without blame or rancour and assists in identifying and clarifying legal and procedural issues. This is done with the singular goal of achieving resolution of disputes based on facts, appreciation of issues and cooperation between both parties,” she wrote.

ADR Body

SIDREC positions itself as an expert, independent and impartial ADR body. It was established by the SC in 2010 as part of its investor protection framework under the Capital Markets and Services (Dispute Resolution) Regulations 2010.

It was designed as an ADR centre to help resolve disputes related to capital market products or services involving monetary claims between individuals or sole proprietors and market intermediaries who are holders of a capital markets and services licence, or are Registered Persons under the Capital Markets and Services Act 2007 authorised for regulated activities, such as dealing in securities or private retirement scheme (PRS), trading in derivatives, or fund management.

SIDREC’s members include banks, stockbroking companies, derivatives broking companies, unit trust management companies, PRS providers and distributors, and fund managers, excluding real estate investment trust (REIT) managers who only manage listed REITs.

The body aspires to be the preferred one-stop independent dispute resolution avenue for disputes involving monetary claims relating to capital market products and services.

Its stated mission is to provide the investing public and its members with a quality, specialised capital market dispute resolution service through a trusted, independent and impartial platform that contributes to enhancing investor confidence in participating in the capital market.

Summing up its role, Sujatha said: “We are here to provide informed expert help to both investors and market intermediaries to resolve their disputes and move on. Specifically from the investor protection perspective, to ensure that you the investor don’t fall through the cracks just because you do not have money or you are not sophisticated enough to ask the right questions, or if you feel intimidated by the environment.”