SIDREC: Resolution of Consumer Financial Disputes Outside the Courtroom

by Zoe Rai

Many investors believe that the only recourse they have when faced with an investment-related monetary dispute is to file a claim in court. They are unaware of the availability of alternative dispute resolution (ADR) avenues to resolve such disputes. This is where the Securities Industry Dispute Resolution Center (SIDREC) plays a crucial role in the resolution of investment-related disputes in Malaysia.

SIDREC is a body approved by the Securities Commission Malaysia to handle capital market-related monetary disputes between individual investors or sole proprietors and SIDREC Members through its dispute resolution process.

SIDREC Members are capital market intermediaries who are licensed or registered to carry out the activities of dealing in securities, derivatives, private retirement schemes, unit trusts and fund management under the Capital Markets and Services Act.

SIDREC’s dispute resolution process consists of case management, mediation, and adjudication. Its services are free of charge to investors with claims not exceeding RM250,000.

Monetary disputes in the capital markets may arise as a result of misrepresentation or mis-selling of an investment product, inadequate disclosure of key features of an investment product, glitches in online investment or trading platforms, unauthorised transactions or misappropriation of funds.

Before coming to SIDREC, investors must first lodge their complaint with their capital market intermediary. If unsatisfied with the response, or having received no response at all, they can then file a claim with SIDREC.

Investors can submit a claim with SIDREC via email, phone call, or walk-in. SIDREC’s process is informal with confidentiality, openness and trust observed at all times during the process.

Every case is assigned to a Case Manager who will first determine whether SIDREC is able to handle the case. If all criteria are met, the case will then proceed to case management.

During case management, SIDREC’s Case Manager will pose queries to the investor/Claimant and the Member concerned to find out more about the dispute and obtain relevant documents. The Case Manager may also hold discussions with the investor or Member to better understand the dispute.

SIDREC will first try and assist to resolve a dispute through case management. If it is not possible to resolve the case at this initial stage, it will then proceed to mediation. At mediation, parties are brought together to attempt to come to an agreement on the dispute with the help of a Mediator. If parties are able to come to an agreement, they will sign a Settlement Agreement that records the terms of the resolution reached. However, if parties are unable to come to an agreement, the dispute will proceed to adjudication.

At adjudication, an Adjudicator will preside over the matter and following the hearing, pronounce a decision on the dispute by way of the issuance, in due course, of a document called the Adjudication Award.

For claims not exceeding RM250,000, the investor/Claimant may accept or reject the Award. Where the investor/Claimant accepts the Award, parties will enter into a written Settlement Agreement reflecting the Award, which will become binding on them. Where the investor/Claimant rejects the Award, he or she may pursue other legal recourse.

Prevention is better than cure

Cases handled by SIDREC provide useful insights on some of the precautionary measures that investors may take to minimise potential mishaps or regretful investment decisions.

First, before making an investment, it is critical that investors conduct their own due diligence and research to enable them to make informed investment decisions. This includes understanding the key features of the investment such as its risks and fees payable as well as verifying that the entity promoting the investment is an entity that is licensed by relevant authorities such as the SC, Bank Negara Malaysia and Bursa Malaysia. Never be pressured in making an investment decision.

Second, investors must remember to pay for their investments directly to their licensed capital market intermediary such as their broker, unit trust management company, fund management company and private retirement scheme provider or distributor. Never hand over cash to individuals or deposit money into their personal accounts.

Third, after making an investment, investors should periodically monitor their investments and at the same time ensure proper documentation of all transactions affecting the investment such as payment receipts, contract notes or statements of transactions.

Fourth, investing through online platforms has become an increasingly convenient way of accessing investing options with fewer processes compared to other traditional means. However, investors must still exercise care when making investment decisions. They also ought to take precautions when making investments through online platforms, including avoiding the use of an online platform when it is experiencing technical glitches, typing the website address (URL) of the online platform as opposed to accessing it through any hyperlink embedded in an email, SMS message, internet search engine, or suspicious pop-up window and setting a strong password and changing it regularly.

Finally, investors should caution themselves against sharing bank account, credit card or online investment account details with anyone or acting upon investment advice or tips promoted through social media channels by unlicensed investment advisers.

For more information, safe investing tips, or to lodge a claim, please visit SIDREC’s website at, call us at 03-2282 2280 or email

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