The Financial Industry Complaints Service (FICS) plans to change some of its rules regarding members’ legal challenges after its professional indemnity insurer refused to pay to defend future challenges by members.

But CEO Alison Maynard says the insurer’s decision – prompted by three challenges to its decisions over consumer complaints – doesn’t threaten the long-term viability of the FICS scheme.

FICS is a free dispute resolution service for consumers, but three members have decided to step outside the normal system and apply for recent decisions to be reviewed by a court. The first challenge left the scheme with a large legal bill.

The service said in a bulletin to its members that dissent over particular adjudications “is not very unusual in alternative dispute resolution schemes, but challenges using external legal mechanisms are. Such challenges could be seen to undermine the viability of the schemes.”

Ms Maynard says FICS has proposed changes to the scheme’s rules, which would see a member seeking a judicial review being made responsible for all parties’ legal costs. That would include the original complainant and FICS.

Consultation meetings on the proposal will be held later this week in Melbourne and Sydney.

Ms Maynard says FICS members have so far been split 50-50 on whether the rule is a positive or negative move. But she says the alternative – charging all members a levy to provide FICS with funds to fight court challenges – “is not in the best interest of members”.

“We don’t want to levy members,” she said. “Why should all members have to pay a levy that will go towards one member’s legal challenge of a FICS decision?”