A review panel set up by the Treasurer to review the effectiveness of external dispute resolution schemes in the financial services industry has recommended that the three established schemes should be merged into one.As a first step the Financial Ombudsman Service and the Credit & Investments Ombudsman would be merged.The Superannuation Complaints Tribunal would be transformed from a statutory scheme into an industry scheme along similar lines to FOS and CIO, and then consideration should be given to further integrating the schemes to create a single scheme.In an interim report published yesterday, the panel rejected the idea of establishing a judicial tribunal, which had been floated by the Prime Minister and was recommended by the House of Representatives Standing Committee on Economics in a recent report.The panel, which was headed by Melbourne Law School professor of commercial law Ian Ramsay, argued that an industry scheme had the advantages of providing free access for consumers, a more collaborative approach and greater flexibility.In other recommendations, the panel said monetary limits should be increased, there was merit in the idea of establishing a compensation scheme of last resort and debt management companies should be required to join and EDR scheme.And it recommended that the Australian Securities and Investments Commission be given extra power to oversee the new scheme.Overall, the panel praised the work of FOS and CIO, saying they had shown themselves to be innovative and adaptive to changes in the financial system, changes in consumer expectations and changing products and services. "Through their work on systemic issues, whereby schemes investigate and resolve issues that have an effect on persons other than the parties to the dispute, schemes have improved industry behaviour," the panel said. "However, the current framework gives rise to problems, including consumer confusion, difficulties in achieving comparable outcomes and unnecessary duplication."The panel rejected CIO's main argument for retaining two financial schemes, which was that competitive tension led to performance benchmarking and improvement.On the question of whether to introduce a tribunal, the panel said: "Industry ombudsman schemes provide benefits not observed or not observed to the same degree in bodies established by government, whose objectives, functions and operational flexibility are typically determined and constrained by the legislation under which they are established."Statutory schemes, such as state-based tribunals, have tended to be more adversarial and legalistic, compared with the industry ombudsman schemes, and this can impede accessibility."Statutory models have also tended to be more focused on addressing the individual dispute, rather than improving broader industry practice."The panel also rejected the idea of leaving all the schemes in place and adding a triage service to direct consumers to the right service. It accepted evidence that previous attempts to create such a service had been unsuccessful because the expertise required to make them run effectively made them expensive to run, with little added benefit.The current monetary limit for both FOS and CIO are that the value of the claim in dispute must not exceed A$500,000 or the credit facility must not exceed $2 million.