There are now three EDRs operating for financial service providers, plus the Banking Ombudsman scheme, which deals only with complaints about banks.

All financial advisers must belong to one of the schemes.

According to their most recent annual reports, Financial Dispute Resolution (FDR) now has 1,500 members, Financial Services Complaints Ltd (FSCL) 6,500 and the Insurance and Financial Services Ombudsman 4,299.

Some of these members are groups that have many staff working for them.

Susan Taylor, chief executive of FSCL, said her organisation had a net increase of 1,363 members across all financial service sectors over the past 12 months.

IFSO saw its membership increase by about 200, of which a spokeswoman said most were financial advisers.

Both services recorded a drop in fees. FSCL’s are now 20% lower than they were four years ago at $248 including GST for individual advisers and those in smaller companies.

IFSO charges $270 plus GST for financial advisers, an annual drop of 10%.

FDR charges financial adviser businesses $400 per adviser, or $250 per adviser in organisations with three or more advisers. It has also reduced its fee over time.

Members pay to have their complaints handled, too.

Taylor said her scheme offered fee discounts for existing members. Last year it offered a 20% cut.  She said there would be a discount again this year although it had not yet been revealed.

The schemes were put under the spotlight as part of the Financial Advisers Act review, which asked whether it was right that there are multiple options. MBIE asked whether there were consistency and transparency issues although it noted there was no evidence of customer harm.

FDR argued that the cost reductions were a sign of the system working well and competitive pressure driving down price. It and FSCL argued there were no problems with multiple schemes.

But IFSO said it was only a matter of time.

‘If nothing is done in New Zealand about competition among multiple schemes, there will be actual evidence of poor outcomes for consumers. That evidence would undermine the stated intention of the legislation. Currently, we must look internationally for comments and, in particular, to Australia, about the detriments of competition among multiple schemes and add it to our own experience; the IFSO Scheme believes that the complexity arising from multiple competing schemes does exist and can hinder a consumer’s access to redress.”

It cited a case in which a woman had a car loan with one provider and loan repayment insurance with another.

When she fell into arrears, her claim was declined. The insurer was a member of IFSO and the car loan provider was with FSCL.

“The customer understood that company was entitled to repossess the car, because she had not made the repayments; however, she strongly believed [the insurer] should have paid the claim.

“FSCL was contacted to see whether it would be prepared to contact its member to ask if it would stop the repossession until the complaint against [the insurer] had been resolved. FSCL declined to become involved.”

MBIE said it would continue to seek feedback on the multiple scheme model.