International Law

External dispute resolution scheme changes

The Australian Securities and Investment Commission (ASIC) has released revised 2 guidance on dispute resolution schemes: RPG 139 and RPG 165. 

The changes announced by ASIC will also introduce a new "compensation caps" approach which means all EDRs will be able to hear cases up to the value of $500,000, the level of the retail client test from 1 January 2010. The amount of compensation schemes will be able to award is a maximum of $280,000, or $150,000 if the claim relates to insurance brokers from 1 January 2012.

Currently, the maximum award amount for EDR schemes is inconsistent and individual schemes cannot hear cases that are worth more than their own minimum cap, which limits coverage.

The guidelines also complement the Rudd Government's recent release of draft legislation creating single, national regulation of consumer credit, including mortgages, credit cards, payday lending and margin lending, and access to low cost, timely dispute resolution

Most new requirements, including the move from monetary limits to compensation caps, will be implemented from 1 January 2010. The new level for compensation caps will be implemented from 1 January 2012 to allow industry time to transition.

Full post as published by Australian Regulatory Compliance Review on May 18, 2009 (boomark / email).