Complaints rules edge closer
Draft rules defining the shape of New Zealand's financial disputes resolution system should be released by early June, three months later than originally scheduled.
Tuesday, May 26th 2009, 6:41AM
by David Chaplin
Evelyn Cole, Ministry of Consumer Affairs (MCA) head of consumer policy, told Good Returns that the two papers outlining proposals for the establishment of a reserve disputes resolution scheme and guidance for other scheme providers were close to reaching Cabinet for approval.
"Ideally [the proposals] would be before the Cabinent committee next week," Cole said, with June 8 the earliest date Cabinet could sign off on the proposals.
Financial advisers will be obliged to belong to an approved dispute resolutions scheme once regulations governing the industry come into force next year. The Financial Services Providers Act, passed last September along with the Financial Advisers Act, included provisions for establishing dispute resolution schemes.
While the law allows for interested parties to form their own dispute resolution schemes - subject to government approval - it also calls for the creation of a reserve scheme to handle all consumer complaints not covered by other providers.
The MCA proposals are expected to address such issues as the financial limit for complaints and the appeals process against decisions by approved dispute resolution bodies. A comprable body in Australia, the Financial Ombudsman Complaints Services (FOCS), deals with complaints with a dollar value of up to A$280,000 for life insurance products or A$150,000 for other financial services.
Under FOCS rules consumers can continue to pursue external legal redress through the courts after a decision while advisers, and other industry participants, must abide by its rulings with no right of appeal.
As well as the disputes resolution papers, other regulatory proposals are also expected to be published shortly. Angus Dale-Jones, Securities Commission director supervision, said the regulator has made some progress on a paper outlining how the contentious Qualifiying Financial Entity (QFE) regime would work.
Dale-Jones said advisers who perform similar duties - regardless of whether they are authorised by the Securities Commission or act under the auspices of a QFE - would have to meet "equivalent" standards.
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