If you provide financial services to retail clients, you must belong to an approved dispute resolution scheme (DRS) in relation to those services, and have their membership details recorded on the register.
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
Unless an exemption applies, all FSPs providing financial services to retail clients must belong to a DRS. Section 49 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 sets out the meaning of a ‘retail client’.
Where required to belong to a DRS, an FSP must add their membership details to the register within 10 working days of registration, and/or within 10 working days of being engaged by a FAP, or face being deregistered.
Financial adviser engaged by FAPs
When a FAP records the engagement of a financial adviser, they must indicate whether they’ll be covering them under their DRS membership. If so, the FAP’s membership details will be added to their registration automatically.
If the FAP is not covering them, the financial adviser must join a DRS in their own name, in relation to the financial advice service, and add the membership details to the FAP engagement section of their registration within 10 working days of becoming engaged.
If they offer other financial services, they must join a DRS in their own name in relation to those services and add the membership details in the DRS section of their registration within 10 working days of selecting the services.
If they fail to provide DRS membership details where required to, they may be deregistered.
Financial advisers engaged by multiple FAPs must have a DRS in place for each FAP.
Who doesn't need to belong to a DRS
You don't need to join a DRS if you:
- 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.
Approved dispute resolution schemes
There are 4 schemes approved by Consumer Protection to provide financial dispute resolution services. They are:
Banking Ombudsman (BOS)
Phone 0800 805 950
Person responsible for scheme: Nicola Sladden (Banking Ombudsman)
Level 5, Huddart Parker Building
1 Post Office Square
Insurance and Financial Services Ombudsman (IFSO)
Phone 0800 888 202
Person responsible for scheme: Karen Stevens (Insurance & Financial Services Ombudsman)
70 The Terrace
Financial Services Complaints Ltd (FSCL)
Phone 0800 347 257
Person responsible for scheme: Susan Taylor (Chief Executive Officer)
Level 4, Legal House
101 Lambton Quay
Financial Dispute Resolution Service (FDR)
Phone 0508 337 337
Person responsible for scheme: Rex Woodhouse (Scheme Adjudicator)
FairWay Resolution Limited
Level 15, Chorus House
66 Wyndham Street
You'll be invoiced by the DRS you join for the fees they charge.