The New Zealand Government is considering merging the country’s four external dispute resolution schemes, in a move that would affect the Insurance and Savings Ombudsman.

There are concerns about the efficiency of having four schemes and fears it encourages consumers or financial service providers to “forum shop” for the one they consider most favourable.

The Insurance and Savings Ombudsman mostly covers personal insurance complaints.

The other schemes are the Banking Ombudsman; Financial Services Complaint Ltd, which has the most members and was set up in 2008; and Financial Dispute Resolution, a government-managed reserve program for providers not covered by the other three.

All four schemes deal with insurance complaints.

The Insurance Brokers Association of New Zealand has questioned whether creating a single body is wise so soon after the country has adopted a new regulatory regime for financial services.

“We need to see how the four bodies respond to the needs of consumers and their members before judging what or who is best,” CEO Gary Young said.

The funding system – under which members of the three independent programs pay a levy to support the reserve scheme – should be reviewed, he says.

“The need for a reserve scheme is debatable,” Mr Young told insuranceNEWS.com.au. “By being subsidised [it was] able to aggressively market [itself] last year, attacking the schemes whose members were providing the subsidy.”

Australia’s Financial Ombudsman Service has a Chief Ombudsman who oversees other ombudsmen, including three lead ombudsmen who cover general insurance, banking and finance and investments, life insurance and superannuation.

A spokesman for the New Zealand Ministry of Business, Innovation and Employment says the consumer affairs department is investigating whether four schemes are necessary. 

“There is an underlying question as to whether less is more for consumers in relation to the financial dispute resolution regime,” he told insuranceNEWS.com.au. “This work is ongoing.”