Kazakhstan to Establish a Single Financial Ombudsman Office

In order to enhance protection of consumers of financial services, it is planned to switch to a behavioral supervision model and establish a single financial ombudsman office.

Madina Abylkassymova, Chairperson of the Agency for Regulation and Development of the Financial Market, made this statement at a presentation to the Majilis of Parliament of the draft laws ‘Banks and Banking Activities in the Republic of Kazakhstan’ and ‘Changes and Amendments to Certain Legislative Acts of the Republic of Kazakhstan on the Regulation and Development of the Financial Market.’ The draft laws were developed for the purpose to implement the 2024 and 2025 Addresses of the Head of State.

"The Draft Law envisages a switch to a behavioral supervision model. Unlike prudential supervision, which ensures financial stability, behavioral supervision focuses on mitigation of risks for consumers.

Goals of the behavioral supervision include protection of consumer rights, promotion of fair competition, and creation of effective mechanisms for pre-trial dispute resolution, as well as monitoring the completeness and accuracy of disclosed information," the Agency's Head stated.

It should be noted that the offered approaches rest on the 12 OECD Principles on Financial Consumer Protection. These international standards have been approved by the Financial Stability Board, which sets global standards in the financial sector.

The principles cover the entire range of financial services regulation, including development of a regulatory framework, fair and equal treatment of consumers, protection from fraud, personal data protection, and creation of effective complaint mechanisms. To ensure implementation of behavioral supervision, the Draft Law establishes requirements for financial product management, disclosure of complete and accurate information, prevention of unfair practices, and acceptance by financial institutions of responsibility for activities of authorized agents and intermediaries.

"The Draft Law also provides for establishment of a single financial ombudsman office for banking, insurance and microfinance services, which will ensure uniformity and independence in study of citizen complaints.

For effective protection of consumer rights, a three-tier system of pre-trial dispute resolution is being introduced. This includes initial complaint review within the financial institution, followed by appeals to the financial ombudsman and authorized agencies if systemic violations are identified," the AEDFM Chairperson emphasized.

The new Banking Law takes into account technological changes, growing role of the banking sector in economic financing, increased competition, and involvement of new market participants, as well as issues of promoting the fintech and liberalizing the circulation of digital assets.