Options
17. The discussion paper proposed several options to improve consumer dispute resolution and redress.
- Status quo (voluntary, sector-specific dispute resolution).
- Improved consumer education and information to build capability of consumers to make informed choices so that they will avoid unsuitable products.
- Enhanced civil remedies and specialist courts/tribunals, for example a specialist Disputes Tribunal for financial disputes.
- Mandatory industry-based dispute resolution, with multiple schemes.
- A single mandatory industry-based dispute resolution scheme.
Views expressed by submitters
18. Submissions on the discussion paper did not generate a clear consensus on a preferred option. Submissions were generally in favour of a mandatory industry-based dispute resolution system, however, there were also arguments in favour of a voluntary dispute resolution system (status quo), and use of the courts as the appropriate place to resolve disputes.
19. Those submissions which favoured mandatory industry-based dispute resolution were fairly evenly split between the single scheme and multiple schemes approaches, with a slight majority in favour of multiple schemes.
Preferred option
20. I recommend adopting for mandatory industry-based dispute resolution, and allowing for the establishment of multiple schemes. Submissions were not able to mount a convincing argument that the efficiency and economies of scale of a single scheme would be sufficient to outweigh the flexibility and greater industry commitment of a multiple schemes approach.
21. It would be counter-productive to tamper with existing schemes that are operating efficiently for the sake of creating a unified, cross-industry scheme. As each sector of the financial industry is quite distinct in terms of the products they provide, participants in each sector should be free to choose the form of dispute resolution that best suits the particular characteristics of the sector, whether that be a sector-specific dispute resolution scheme or a wider scheme.
22. The industry-based dispute resolution system is intended to operate as a complement to the courts. This means that consumers will still retain their right to take court action if they wish.
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