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NZMBA first association to join up to disputes resolution scheme

The New Zealand Mortgage Brokers Association (NZMBA) is the first association to join up en masse to an external disputes resolution scheme.

Wednesday, March 3rd 2010, 5:10AM 1 Comment

by Jenha White

NZMBA chairman Darren Pratley says it has joined up to FSCL, an unaligned scheme operated by disputes resolution specialists.

He points out that a whole lot of advisers are running down the track with the education side of regulation "but there are a number of hurdles we have to jump first before we even get assessed".

It is a requirement of the Financial Service Providers Act 2008 that before registration advisers have to belong to an external disputes resolution (EDR) scheme.

Pratley has negotiated a special discounted rate for NZMBA members who sign up to FSCL before 31 March to get as many members joining as possible.

"Industry has to get involved with the process and make sure it's leading advisers down the right pathway, by being proactive you can make sure you've got as many members across the line as possible."

He says the NZMBA wants to get members to sign up as early as they can because it wants to see a continued building of professional standards for the consumer so they are looked after and protected, not just because of regulation.

FSCL chairman Kenneth Johnston believes it's a very good thing for an association to say it shouldn't be compelled to join a scheme, but if it believes in accountability and service to its customers, it should be ready to join now.

"Darren's taking the moral high ground in his approach and I'd assume other adviser groups would see the sense in following his lead."

Johnston says when FSCL was first set up it had an obligation under the act to consult and confer with industry to understand what was required from EDR.

"The act anticipated that industry was to generate these schemes and so our first obligation was to go to industry and say what do you want to see from a dispute resolution provider?"

FSCL consulted with the Financial Services Federation, some finance companies, some investment banks and various adviser bodies such as the Institute of Financial Advisers (IFA), the Society of Independent Financial Advisers (SiFA) and the NZMBA.

Pratley says in the consultation process he really pushed the idea of introducing a mediation process rather than letting disputes go straight to an EDR which was taken onboard by FSCL.

"In a lot of situations these disputes can get blown out of proportion because the adviser hasn't been able to handle it, so the introduction of an internal disputes resolution (IDR) process manual and skills training helps the adviser and the consumer."

Johnston says FSCL is the only EDR scheme to his knowledge that provides IDR.

"By having IDR we're effectively fencing off the top of the cliff and hoping less people fall off it."

He says diverting complaints in this way allows FSCL to operate more cheaply, so it can then fix low member fees.


Jenha is a TPL staff reporter.

Tags: regulation

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Comments from our readers

On 5 March 2010 at 3:03 pm Pip said:
The requirement in the FSPA is actually to join a dispute resolution scheme that has been approved by the Minister - not just any external dispute resolution scheme.

The applications haven't opened yet for approved dispute resolution schemes so people should probably wait to find out if the scheme is approved before they join - especially as there are only likely to be half a dozen approved schemes.
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