Complaints, dispute resolution and breach reporting
What this domain tests
This domain tests whether you can respond to client harm, escalate internally, use the external dispute resolution scheme, and notify the FMA when required.
Core rules and concepts
Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008, financial service providers must be members of an approved dispute resolution scheme. Firms need an internal complaints process: acknowledge, investigate, respond within stated timeframes, and refer unresolved complaints to the scheme. Complaints must be recorded, and root-cause analysis should feed remediation.
Licence conditions under the FMC Act require notification of material breaches and notifiable events to the FMA as soon as practicable. Materiality considers regulatory, financial, and reputational impact, client harm, and systemic risk. Breach reporting is not satisfied by compensating a client; the FMA must be told if the threshold is met.
Worked example
A client complains that a dealer executed a trade without authority. The firm investigates and finds the adviser used a stale authority. The firm should remediate the client, review similar accounts, record the complaint, and assess whether the control failure is a material breach requiring FMA notification. Referring the client to the dispute scheme without investigating is not enough.
Traps
Calling a complaint feedback to avoid the process. Missing the dispute scheme's time limits. Assuming client compensation removes the need to report. Failing to notify the FMA of a material breach because it is embarrassing.