The obligation is included in the Financial Services Legislation Amendment Bill, which is currently before Parliament.

Susan Taylor, chief executive of Financial Services Complaints Ltd, told the Financial Services Council conference that her scheme always tried to reach an early resolution when it received complaints.

“That’s usually in everyone’s best interests,” she said.

“Often we’ll seek to settle the complaint by way of negotiation or confidential conciliation with parties around the table. This is often best for everyone, they reach a settlement that the consumer is happy with and that also allows the adviser and often their professional indemnity insurer to reach a quick efficient settlement to walk away and put the matter behind them."

But she said there was a danger that could change with the new rule.

"If the provider or adviser knows that we're going to be required to report on them to the FMA, and potentially they could be named and shamed, there may be less willingness to come to the negotiation table and crunch out a settlement. They may want to defend their position to the last degree."

FSLAB has been amended as it progressed to make the obligation on dispute schemes stricter.

Originally, it required only that the regulator be notified if there was a series of material complaints.

But submitters said that was too high a threshold - even a serious material breach, as a one-off, would not have to be reported.

The bill was updated before it was introduced to the house, requiring dispute schemes to share information whenever there had been a material breach of financial markets legislation.