Do I need to join a dispute resolution scheme?

The main purpose of dispute resolution schemes is to provide consumers access to redress, and promote confidence in financial service providers.

FSPs who offer to provide a financial service to retail clients must belong to a dispute resolution scheme before they begin the registration process, except some financial advisers who will be covered by their employer’s scheme membership.

Membership for the purposes of the FSPA means the FSP may be the subject of a complaint to the scheme.

There are two options – you can join an approved scheme or the Government’s reserve scheme.  You will need to pay the membership and complaints fees of the scheme you join in addition to the consumer dispute resolution regime administration contribution component of the registration fee.

The scheme you join will depend on what type of FSP you are and what types the approved schemes will accept as members.  The reserve scheme will take applications from any type of FSP.

Exemptions from the need to join a consumer dispute resolution scheme

Not every FSP has to join a dispute scheme in order to the registered on the FSPR.

Issuers

The new section 48(3) of the FSPA exempts companies who are only providing a financial service because they are participating in the offer of investments to the public (issuers and promoters) but the offer of securities is not the company’s only or principal business.

Low value non-cash payment facilities

Regulation 15 of the Financial Service Providers (Exemptions) Regulations also provides that a financial service provider will not have to join a dispute scheme in respect of any financial service (set out in section 5 of the FSPA) – other than the provision of credit – provided in the course of providing a low-value cash payment facility to users (with a maximum cap of NZ$1,000 for individuals or NZ$15,000 for others). 

Related links

Ministry of Consumer Affairs’ website page on Dispute Resolution

Dispute Resolution Schemes