The Financial Planning Association (FPA) says a single external dispute resolution (EDR) body could harm third parties during a dispute.

In a submission to Treasury, it says third parties should be allowed to participate, so they are not damaged by any determination.

It says if an adviser is involved in a dispute before an EDR body, the determination could inflict reputational damage if they cannot present their version of events.

“The scheme functions should include ensuring that such a financial adviser has a reasonable opportunity to be heard,” the FPA says. “We would envisage the scheme rules would restrict the ability of members to prevent such third parties from being heard in relevant matters.”

The FPA says having only one EDR scheme reduces the scope for different approaches to governance and dispute resolution. This may disadvantage members of current schemes.

“To help deal with this problem, we recommend that the functions should also include ensuring the minority interests of members of the scheme are reflected in the scheme rules and practices,” the submission says.