A Need for Change? New Zealand’s Financial Dispute Resolution Schemes

Abstract

Financial dispute resolution is an integral part of any financial system; it ensures that consumers have access to fair redress, for example if their financial provider has failed to adequately support them or subjected them to irresponsible lending practices. NZ financial dispute resolution service has continued to evolve since its establishment to accommodate changes in the financial market. This has resulted in the existence today of four different external dispute resolution schemes. The operation of four schemes has caused debate on whether or not the framework is operating to the highest standard of efficiency to enable consumers to access fair and equitable redress when lodging a complaint against a financial provider. Financial mentors across New Zealand are strongly appealing for a legislative restructuring to disengage the current four schemes; urging to replace them with a single dispute resolution body.

This paper will analyse the current framework New Zealand has in place and analyse the different perspectives on whether legislative change is required. Part II will consider how our current system came to exist before moving on to consider the main issues that are found within the multi-scheme framework in Part III. Part IV analyses the benefits of moving to a single dispute resolution framework in the context of Australia and their recent move to the single-scheme Australian financial complaints authority. Part V will raise opposing arguments on the effectiveness of the current framework. Having analysed the different arguments on the performance of the current framework Part VI will propose an alternative solution that seeks to encompass both perspectives.