Discussion Paper

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Foreword

Government agencies are currently undertaking considerable work to implement a registration system for all financial service providers.

In order to register, financial service providers will be required to meet conduct checks defined in Part 2 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. In addition, most providers will have to meet additional licensing and authorisation requirements, and providers must identify the consumer dispute resolution service to which they belong.

Under the Financial Service Providers Act, providers have the ability to form their own dispute resolution schemes and have them approved. The Act sets out the criteria that must be met in order to obtain approval. I encourage financial service providers to consider this option. To this end, a discussion paper outlining draft guidelines to assist schemes applying to become an approved dispute resolution scheme has been released.

Industry-led schemes - run by relevant industry members who strongly support the principles underpinning their scheme - deliver good outcomes for consumers and can also be tailored to the specific industry sector as compared to a catch-all scheme.

This said, the Financial Service Providers Act recognises that not all financial service providers may be able to co-ordinate to form industry schemes. Accordingly, the Act requires the establishment of a reserve scheme that any financial service provider may join.

This discussion paper sets out the proposed form and rules of the reserve scheme. It is important that the reserve scheme has rules that provide for fair and reasonable outcomes for both consumers and industry members. It is also important that the reserve scheme is not seen as the "second class" scheme or as the "gold plated" scheme. I invite your comments on the proposed rules.

For those considering establishing their own consumer dispute resolution scheme the proposed reserve scheme form and rules may provide a type of template. You are most welcome to use this discussion paper for this purpose.

Hon Heather Roy
Minister of Consumer Affairs

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