GISC is in talks with the Chartered Institute of Arbitrators about establishing an alternative dispute resolution (ADR) service for the insurance industry.

GISC head of policy Angela Darling said that the service could be necessary as FSA regulation may leave a gap in the dispute resolution process.

The Financial Ombudsman Service, which will handle complaints under the FSA regime, is mandated to deal only with complaints from consumers and those from businesses with turnover of up to £1m.

But Darling said many businesses with turnover over of £1m would still not be able to fund expensive legal disputes with brokers, prompting the need for some kind of alternative dispute resolution service.

"The idea of using something other than the courts would appear to make good sense in many, many cases," Darling said.

She said that while GISC handled complaints only from consumers, it could "prompt" or help facilitate resolutions between brokers and small business clients.

Chartered Institute of Arbitrators director of operations Allan Connarty warned that there would be "an absence of provision if nothing is done".

He said a resolution service could provide mediation, arbitration and adjudication facilities, but that such a service would come into existence only if the industry expressed its support for the venture.

Connarty said the institute already provided dispute resolution services for some businesses within the industry.

He said he had not yet spoken to the FSA about setting up an industry-wide service.