A DRS provides your customers with a process to manage any dispute that arises as a result of the financial services you provide. If you have to join a DRS, you must do that immediately and add your membership details to your registration within 10 working days of registering as a financial service provider (FSP).
What a DRS is and who can use one
A DRS deals with customer complaints or disputes with their FSP. All DRSs have rules about their complaints process, what you have to do and the kinds of complaints they deal with.
Only individual customers of an FSP or small organisations with 19 or fewer full-time equivalent employees can take a complaint to your DRS. It's free for them to do this, but they must take their complaint to you first.
Who must belong to a DRS
Most financial service providers who provide a service to retail clients must belong to an approved DRS. A retail client is anyone who is not a wholesale client under the Financial Service Providers (Registration and Dispute Resolution) Act 2008.
Some financial service providers are covered by their employer’s scheme. If you change employers check that your DRS membership details are up to date on the Financial Service Providers Register (FSPR).
Who doesn't need to belong to a DRS
You don't need to join a DRS if you:
- only provide advice on behalf of a business that's already a member of a DRS
- only provide services to wholesale clients, such as other businesses, professional investors, large companies, related companies and Crown agencies
- issue or promote securities to the public from time to time, but it's not your principal business
- only offer a financial service, other than the provision of credit, which offers a low-value cash payment facility to users with a maximum cap of $1,000 for individuals or $15,000 for others.
Approved dispute resolution schemes
There are 4 schemes approved by Consumer Protection to provide financial dispute resolution services. They are:
- Banking Ombudsman (BOS) — this scheme is only available to registered banks
- Insurance and Financial Services Ombudsman (IFSO)
- Financial Services Complaints Ltd (FSCL)
- Financial Dispute Resolution (FDR)
You'll be invoiced by the DRS you join for the fees they charge.