Legislative Framework Relating to Applications to Become an Approved Dispute Resolution Scheme

28. Section 51 of the Act provides for applications to the Minister of Consumer Affairs to become an approved dispute resolution scheme.

29. An application for approval needs to contain the rules of the scheme.

30. The scheme's rules may be in the form of a single document or may be set out in a variety of documents, including the scheme's terms of reference, specific rules, dispute resolution protocol, constitution, code of conduct and the membership participation agreement. The exact arrangement of a scheme is left to members to decide upon.

31. The rules, as a minimum, must address the requirements for scheme rules as set out in section 63 of the Act and the benchmark principles: accessibility; independence; fairness; accountability; efficiency; and effectiveness.

32. Section 52 of the Act sets out the considerations the Minister must have regard to in evaluating an application. These considerations are:

1. Whether the applicant has undertaken reasonable consultation on the scheme with members or potential members of the scheme, and persons (or their representatives) likely to be substantially affected by the scheme;
2. Whether the applicant has adequate funding to enable it to operate the scheme according to the scheme's purpose and in accordance with the rules about the scheme;
3. Whether the applicant's directors and senior managers are competent to manage a dispute resolution scheme;
4. Whether the scheme has an appropriate purpose;
5. Whether the scheme is capable of resolving disputes about the types of financial services provided by the members or potential members of the scheme;
6. The amounts of money that complaints lodged with the scheme may be about, and whether those amounts are reasonable and appropriate;
7. Whether the rules about the scheme are adequate and comply with the benchmark principles (see below), and the requirements of section 63;
8. The number of currently approved dispute resolution schemes;
9. The types of financial service providers that may be members of currently approved dispute resolution schemes;
10. The proposed size of the scheme;
11. The types of financial service providers that may be potential members of the scheme;
12. Any other applications for approval that have been made.

33. The Act also provides for regulations to prescribe an application fee and other information to be provided with the application. At this stage regulations are not planned.