The dispute resolution schemes made a joint submission to the select committee considering the Financial Services Legislation Amendment Bill.

As it stands, the bill proposes requiring the scheme to report individual material complaints to regulators such as the FMA.

At the moment they must only do so if they see a series of material complaints.

The schemes want the wording changed so they would only need to report if the complaint contributed to a series of similar complaints or reflected a systemic issue.

They also made that point in written submissions on the bill.

Slater said it was hard to say how many adviser complaints could be referred on if the law change went through as it is currently worded.

“I would be prepared to debate with the regulator the issue of a ‘material breach’ verses the confidentiality of mediation/conciliation and until that was fully concluded I would continue to report only systemic or serious conduct breaches.”

He said the wording would negatively impact schemes’ ability to use methods such as mediation to facilitate good, prompt outcomes.

“ In simple terms it requires us to report any material breach whether fully proven or not.  Even if we just ‘suspect’ a breach then it must be reported.  Whilst all schemes want the ability to report systemic and serious conduct the proposed requirement to report even a minor breach will deter a scheme member (FSP) from participating in a resolution process such as mediation,” he said.

Slater said the schemes’ methods encouraged open and frank discussion in a confidential setting.

“Sometimes the admission a mistake was made can be the key to resolution and a satisfied consumer.  If we need to report that mistake although it may not be systemic or serious then I would suggest a FSP would not be inclined to participate in an ADR process and will look to strongly defend their position.

“The joint submission appeared to be well received by the Select Committee and members did not raise any questions.”