Financial Dispute Resolution (FDR) Scheme

Introduction

Government has introduced law changes to regulate the financial services industry. The changes will be in place by the end of the year, when people and organisations supplying financial services and advice to retail clients must be registered by law. The aim of the new laws is to promote the sound and efficient delivery of financial services and advice, and to encourage public confidence in financial service providers and advisers.

People and organisations providing financial services and advice to the public must be on the Financial Service Providers Register (operated by the Companies Office) by 1 December 2010, and one of the requirements of being registered is being a member of an external dispute resolution scheme.

FDR is the independent and alternative dispute resolution scheme that has been established by government (originally referred to as the Reserve Scheme), and DRSL is the specialist dispute resolution company that is setting up and operating the scheme.

Financial service providers and advisers can register with FDR now. Organisations that are members of FDR will have already completed one of the critical elements of their registration process.

Enquiries

If you have any questions or want to register your interest in joining FDR, you can use the enquiry form. You can also email your details so we can contact you, or call FDR free on 0508 337 337. You can also fax us on 04 9184901. If you would like to send mail to FDR you can post it free of charge using Freepost 231075, to P.O.Box 5730, Wellington 6145.

You may also be interested in our fees, FAQ page, or our FDR Glossary

There is other information below about FDR and how it works. Click on a link to take you to the information you want.

More information:

What does this mean for people and organisations that provide financial services and advice?
Timing
Fees
Process
Technical expertise
Member compliance
FAQ
Glossary of FDR terms
About DRSL
Other links

What does this mean for people and organisations that provide financial services and advice?

The new laws mean that all people and organisations providing financial services and advice to the public need to register with the Financial Service Providers Register before 1 December 2010. In order to be registered, most financial service providers will need to have joined an external dispute resolution scheme.

A few financial service and advice providers will not have to join a dispute resolution scheme however. These are;

Financial providers who only deal with wholesale clients,
Financial advisers who are employed by a registered financial service provider, and
Financial advisers who are nominated representatives of a Qualifying Financial Entity(QFE).

For more information about registration, see the Financial Service Providers Register website. For more information on which financial advisers have to join a dispute resolution scheme see the Securities Commission website FAQ Pages and Information for Financial Advisers or the Financial Service Providers Register FAQ page.

Timing

There are some key dates that individual financial service providers, advisers and organisations should be aware of, including registering with an external dispute resolution scheme. This is a key requirement for registration.

Now:
FDR is open for registrations of interest from financial service providers and advisers now. Financial service providers and advisers must be a member of a dispute resolution scheme before they can register, so organisations that are members of FDR will have already completed one of the critical elements of their registration process.

You can register your interest or make any other enquiries about FDR here.

1 October 2010:
FDR can consider complaints from consumers about disputes that happened from this date onwards. Consumers must have made the complaint to their financial service provider or adviser first, and that person or organisation must be an FDR scheme member.

1 December 2010:
Financial service providers must be registered.

31 March 2011:
Financial advisers must be registered.

Fees

The FDR scheme is funded by Government and by Scheme Members. There is an annual membership fee, determined by membership type, and a cost-per-complaint charge. This means that if there are no complaints against your organisation your only cost will be the membership fee.

Membership and complaint fees are still being finalised, however membership fees will not be charged until 1 October 2010 – the date from which FDR can accept complaints. People and organisations that join after 1 October 2010 will pay an annual membership fee from the date that they join. Membership fees are paid six-monthly, in advance.

Process

FDR provides a three-level dispute resolution process, which aims to resolve disputes efficiently and thoroughly. Disputes that can't be resolved move through the dispute levels. Scheme members are charged a higher complaint resolution fee at each level.

If an agreement between the parties cannot be reached, FDR will issue a formal decision. If a complainant is satisfied with the outcome of the formal decision it becomes binding on the scheme member.

Complainants who are still not happy with the outcome have the option of taking their dispute through other channels such as the Courts or the Disputes Tribunal.

Coverage
Consumers can make complaints regarding the services and advice they have received from a scheme member. They can't complain about a scheme member's general policies and practices or fees.

Compensation
There is a compensation cap of $200,000. A complaint can be taken to FDR that involves more than $200,000, but the maximum compensation available will still be $200,000.

Consumers
Any consumer who has received financial services or advice from a scheme member, or who has been denied access to financial services or advice by a scheme member, can use the FDR service at no cost. Consumers are defined as individuals, or organisations with up to 19 full-time-equivalent employees - however FDR can also accept complaints from larger organisations at its discretion.

The Dispute Resolution Process

Registration – the complaint is assessed for jurisdiction and deadlock. The complaint must have already been made to the Scheme Member, and the Scheme Member given an opportunity to resolve it. The complaint must also be about an event that happened on or after 1 October, 2010 (the date from which FDR can accept complaints), or after the date that the Scheme Member joined FDR.

Level 1 – Information is gathered from all parties and exchanged. This can often result in resolution, once all the parties can see all of the information, and gain a better understanding of the others’ position. However, if there is no resolution at this stage the dispute moves to Level 2.

Level 2 – FDR gathers more information from all parties and assesses the dispute. At this level FDR aims to help the parties reach an agreement themselves.
FDR arranges and acts as a mediator at meetings between the parties – either face-to-face or via video or telephone conference. If the parties can’t reach an agreement or a meeting doesn't take place, FDR considers all of the information and recommends a settlement. If the parties don’t agree to the recommended settlement, the dispute moves to Level 3.

Level 3 – FDR proposes a final decision. If the parties don’t agree with the proposed decision, FDR issues a final decision. If the final decision is accepted by the complainant the decision becomes binding on the Scheme Member.

If the complainant is still not happy with the outcome the complaint is closed. The complainant is still able to take the matter through other channels such as the Courts or the Disputes Tribunal.

Technical Expertise

DRSL has extensive experience in dispute resolution and a network of independent financial sector consultants it will work with on FDR disputes. These include industry representatives and consumer rights specialists, who accurately reflect the market, current best practice and reasonable consumer expectations.

Member Compliance

In order to comply with FDR scheme rules, financial service providers and advisers must have an internal procedure for dealing with complaints. They must tell present and prospective clients about their complaint handling procedure, and advise that they are members of FDR. Members must agree to providing all necessary information in a complaint process, and agree to be bound by the rules of the scheme.

About Dispute Resolution Services Ltd (DRSL)

www.drsl.co.nz

Dispute Resolution Services Ltd (DRSL) is the company implementing and operating the FDR scheme. DRSL is an award-winning, nationwide company with extensive public and private sector experience. It provides the primary dispute resolution service for ACC, and for the telecommunication industry as the scheme provider for the Telecommunication Dispute Resolution service (TDR).

DRSL has been operating since 1999, and covers a range of industry sectors, including complex medical, disability, employment and commercial issues. DRSL is ISO 9001 compliant and has offices in Auckland, Wellington and Christchurch.

For more information about the senior management and board of DRSL, please follow this link.

Dispute Resolution Services - Te Ratonga Whakatau Wenerau