A Comparative Study of ADR Mechanisms in Banking and Financial Sector Disputes

Abstract

This study undertakes a comparative analysis of Alternative Dispute Resolution (ADR) mechanisms in the banking and financial sector, focusing on their effectiveness, efficiency, and accessibility in resolving disputes. With the increasing complexity of financial transactions and the growing volume of disputes between financial institutions and customers, traditional litigation has proven to be time-consuming and costly. ADR methods such as arbitration, mediation, and negotiation offer flexible and expeditious alternatives. This research examines the legal frameworks governing ADR in selected jurisdictions, evaluates institutional mechanisms such as banking ombudsman schemes, and assesses their practical impact on dispute resolution. The study adopts a doctrinal and comparative methodology, supported by case law analysis and policy review. It identifies key challenges, including enforcement issues, lack of awareness, and institutional limitations, while highlighting best practices that enhance the credibility of ADR systems. The findings suggest that a robust ADR framework can significantly improve dispute resolution outcomes, reduce judicial burden, and strengthen consumer confidence in the financial sector. The study concludes with recommendations aimed at harmonizing ADR practices and improving their implementation in banking disputes.