KUALA LUMPUR, March 27 — Investors have access to alternative dispute resolution services to help settle monetary disputes with their licensed capital market provider through the Securities Industry Dispute Resolution Centre (SIDREC).

Set up by the Securities Commission (SC), SIDREC is an independent body established for the settlement of disputes between investors and its members dealing in securities, derivatives, unit trusts, private retirement schemes and fund management.

Under its Mandatory Scheme, SIDREC’s services are free of charge for claims of up to RM250,000. Here, it is mandatory for the SIDREC member to participate if there were a claim filed against them.

For claims above RM250,000, it is under its Voluntary Scheme and a reasonable fee is charged. At the same time, the agreement of both parties is required for parties to submit to SIDREC’s dispute resolution process.

'Come to us, do not shy away'

Speaking to Bernama in an interview recently, SIDREC chairman Datuk Mah Weng Kwai highlighted that SIDREC accepts claims from any person regardless of their nationality or where they live, as long as the claim is in relation to a capital market product or service provided to them by a SIDREC member.

He further said that investors should come to SIDREC if they have an unresolved monetary dispute with a SIDREC member.

"Come to us, do not shy away from contacting us regardless of the claim amount. We even have a claim as small as RM10 and as large as over RM1 million,” he said.

Mah also shared that some of the claims were in relation to issues such as service standards that include delays, errors, or glitches in online systems.

"Market conduct such as fraud, sales practices such as mis-selling, bad advice, product suitability, inadequate disclosures, unauthorised transactions, or non-compliance with client instructions and member’s

practices or policies such as fees and charges and disclosure policy.

"To access SIDREC services, claimants must first lodge a complaint with the financial service provider,” he said, adding that if they were dissatisfied with the outcome of that, they have 180 days to file a claim at SIDREC against that member.

Mah stressed that SIDREC’s objective is not to find fault with any one party, but to assist them (the investors and capital market intermediary) in settling the dispute that they are unable to resolve on their own.

"Once a complaint or claim is lodged, we hope that both parties will provide all the information and documents needed so that the problem can be resolved within 90 working days after receiving complete documentation,” he said.

The time frame may be extended at SIDREC’s discretion depending on the complexity of the disputes, the level of cooperation extended by the parties, and any logistical impediments involving any of the parties, he said.

The process of dispute resolution

Upon receiving a claim, SIDREC will assign a case manager to evaluate whether the claim falls within SIDREC’s jurisdiction, and if it does, the process will then begin, Mah said.

He said the case manager will go through the information, query the investor and SIDREC’s member on the issue, and once all the relevant information is gathered, SIDREC will take a mediative or facilitative approach to see if the case can be solved between the two parties.

"If the problem is not resolved at the case management stage, then it moves on to the next stage which is what we called mediation, where SIDREC’s mediator will try to help parties reach a resolution to the dispute.

"And if they still fail to reach an agreement through mediation, the matter will then proceed to adjudication during which SIDREC’s adjudicator will conduct a hearing of the matter and issue a decision,” he said.

Mah said SIDREC’s adjudication decision is binding only on its member.

"If the investor is unhappy with SIDREC’s decision, the person is free to explore other avenues to resolve their complaint.

"However, if you accept the decision, you will then enter into a settlement agreement with the SIDREC member, and this will then be binding on both parties,” he said.

Most disputes during Covid-19 pandemic

According to Mah, from 2011 until now, SIDREC has managed a total of 3,426 claims and enquiries of which, a total of 660 eligible claims were registered.

Of that total, 430 cases were resolved while 230 claims were discontinued due to not being eligible.

He said the lowest number of disputes recorded was in 2011, with 11 cases, while the highest spike in disputes was recorded during the COVID-19 pandemic in 2020, amid a retail trading boom.

"During the year, 103 eligible cases were filed, with many of the disputes in relation to online trading hiccups involving shares, warrants and unit trust.

"Most of the claimants are aged between 19 and 80 years old and the majority of the cases involved claims that are below RM250,000,” Mah said.

He noted that all information regarding the cases is confidential and he hopes that SIDREC’s presence will help maintain the confidence of retail investors in the capital market.

Mah, who owns a law firm, highlighted that SIDREC is not replacing the courts as they have their role to play.

"We are here to help the small retail investors who do not have the necessary financial resources to undertake costly litigation if you undertake lawyers and file court proceedings,” he said.

SIDREC Annual Report 2022

In SIDREC's latest annual report, it was stated that the Financial Sector Blueprint 2022-2026 launched by Bank Negara Malaysia (BNM) on Jan 24, 2022, included an announcement that SIDREC and the Ombudsman for Financial Services (OFS) will be consolidated into an Integrated Dispute Resolution Scheme (IDRS).

Mah stated in the report that work has been in progress for some time now and in January 2023, both BNM and the SC instructed OFS and SIDREC to establish an IDRS.

Further to the work of the joint working group, a Merger Steering Committee and three Sub Committees have been formed and it is chaired by BNM and the SC with representation from board members of both OFS and SIDREC.

The three Sub-Committees made up of Dispute Resolution, Manpower and Funding, Legal and Governance are chaired by Tan Sri Dr Foong Cheng Yuen and Tan Sri Zaleha Zahari of OFS and Datuk Mah Weng Kwai.

Mah also stated that the merged entity is envisaged to be operational by Jan 1, 2024.

Advice to investors

Due to the rising number of scam cases, Mah reminded investors to be extra cautious.

"Always check with the SC website to get updates on the licensed organisations that are listed on the SC or BNM’s website.

"Always be cautious when making any investment decision, make as much effort to understand the terms and conditions and importantly, do not give cash to any individual but make any payment directly with the organisation itself so that you have the track record,” he said.

Mah also said that investors should not feel pressured to make any decisions.

"It is your hard-earned money, do not let anyone force or pressure you to make any investments no matter who they may be.

"Check with the investor alerts on the regulators’ websites from time to time as they are always being updated as and when a potential scam is detected, as well as with the police’s Semak Mule portal,” he said.

Mah also urged investors to always monitor their statements, especially after making an investment.

"These are the kind of documents that SIDREC will ask for when there is a dispute,” he said.

For more information, investors can contact SIDREC or visit https://www.sidrec.com.my/ — Bernama