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Schemes query disclosure requirement

Financial Disputes Resolution Service client director Trevor Slater says he’s willing to make a stand over the requirement that external disputes resolution schemes increase their reporting to regulators.

Monday, May 21st 2018, 6:00AM 3 Comments

by Susan Edmunds

The dispute resolution schemes made a joint submission to the select committee considering the Financial Services Legislation Amendment Bill.

As it stands, the bill proposes requiring the scheme to report individual material complaints to regulators such as the FMA.

At the moment they must only do so if they see a series of material complaints.

The schemes want the wording changed so they would only need to report if the complaint contributed to a series of similar complaints or reflected a systemic issue.

They also made that point in written submissions on the bill.

Slater said it was hard to say how many adviser complaints could be referred on if the law change went through as it is currently worded.

“I would be prepared to debate with the regulator the issue of a ‘material breach’ verses the confidentiality of mediation/conciliation and until that was fully concluded I would continue to report only systemic or serious conduct breaches.”

He said the wording would negatively impact schemes’ ability to use methods such as mediation to facilitate good, prompt outcomes.

“ In simple terms it requires us to report any material breach whether fully proven or not.  Even if we just ‘suspect’ a breach then it must be reported.  Whilst all schemes want the ability to report systemic and serious conduct the proposed requirement to report even a minor breach will deter a scheme member (FSP) from participating in a resolution process such as mediation,” he said.

Slater said the schemes’ methods encouraged open and frank discussion in a confidential setting.

“Sometimes the admission a mistake was made can be the key to resolution and a satisfied consumer.  If we need to report that mistake although it may not be systemic or serious then I would suggest a FSP would not be inclined to participate in an ADR process and will look to strongly defend their position.

“The joint submission appeared to be well received by the Select Committee and members did not raise any questions.”

Tags: disputes

« Soft commission schemes untenable under new regime: FMAMann on a mission to diversify financial advice »

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Comments from our readers

On 21 May 2018 at 9:38 am Murray Weatherston said:
This submission seems eminently sensible to me. I hope the Select Committee and its officials were listening and were sufficiently motivated to take action and change the Bill.
The required reporting of suspicions seems to introduce the doctrine of "guilty till proven innocent" which should be repugnant to most people. It makes the EDRS schemes unpaid and involuntary front line policemen for the regulators.
On 21 May 2018 at 10:18 am dcwhyte said:
Just as critical - it is likely to discourage Advisers from seeking guidance and input from highly qualified and experienced operators like Trevor. The object of the exercise is to resolve the client's issue - not to provide FMA with commentary.
On 21 May 2018 at 2:34 pm Brian Klee said:
Absolutely agree, Trevor - as well as the comments from Murray and David.

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