The Court of Appeal has directed the Chief Ombudsman to reconsider Financial Services Complaints Ltd’s request to use the word “ombudsman” as part of its name.

FSCL applied after the Insurance and Savings Ombudsman revealed its intention to rebrand as the Insurance and Financial Services Ombudsman.

The external disputes resolution service argued that it would give it gravitas and help it compete with IFSO and the other schemes, if it, too, could be an ombudsman.

The term "ombudsman" is restricted in New Zealand and those who use it must get approval from the Chief Ombudsman. Since 1991, only three have been approved, including the Insurance and Savings Ombudsman and the Banking Ombudsman.

FSCL's application was initially declined, and it took its case to the High Court.

But Justice Simon France said he was not persuaded that FSCL needed to use the term to establish itself as having the necessary qualities displayed by other schemes.

He said it had not been disadvantaged in any material way by its inability to call itself an ombudsman and pointed to concern about confusion as a result of IFSO and the Banking Ombudsman using the name.

The Court of Appeal has now overturned both those earlier decisions.

“If other similar schemes in the same sector as the applicant are already using the  name  ombudsman, it is difficult to understand how granting the application would increase confusion.  Indeed, there is a strong argument to the opposite effect," the court's judgment said.

"Arguably, it is more likely that what will increase confusion is treating very similar schemes in the same sector (including a scheme with part of the  same  name) differently. Yet that is the effect of denying consent in this case."

The court said the Chief Ombudsman was entitled to consider the impact of having a number of non-parliamentary ombudsmen. But in doing so, regard had to be given to the existing permissions in the marketplace and the need to treat applicants consistemently.

"There should not be a 'first mover' advantage."

The judgment also said that, while consumers have to use the dispute resolution scheme of their service provider, there was a public interest in consumers having confidence in the integrity of a scheme. 

"It is not unreasonable to suggest that consumer confidence in the integrity of Complaints Ltd’s scheme may be reduced by the  absence of the name ombudsman especially  when other similar schemes including one with a similar name are called ombudsman."

FSCL chief executive Susan Taylor said she was very pleased with the decision.

"We're now waiting to hear further from the Chief Ombudsman."

She said she had not been given any indication how long the process might take.