A rule that prohibits a lender from starting debt recovery legal proceedings against a borrower in situations where the borrower has lodged a complaint with an external dispute resolution service is to remain in place, despite industry complaints that it an unreasonable restriction.The Australian Securities and Investments Commission has released the results of a review of the jurisdiction of EDR schemes, in which it confirmed "the appropriateness of the existing policy settings".ASIC Regulatory Guide 139 states: "The terms of reference of an EDR scheme must require that legal proceedings by scheme members (lenders) should not be commenced where a complaint or dispute has been lodged with the scheme."If legal proceedings are already underway, once a complaint is lodged with an EDR scheme the lender must stay or discontinue the proceedings while the complaint is being handled.The reason for this is that "commencing legal proceedings in relation to a complaint or dispute lodged at EDR creates the potential for scheme members to undermine the EDR process. There is also the possibility that the same complaint or dispute will be dealt with in two competing forums, wasting time and resources."ASIC has said this provision is primarily intended to assist complainants in hardship.As a condition of their licences, credit providers and their representatives must be members of an EDR scheme.A number of industry bodies, including the Australian Bankers' Association and Abacus, the peak body for mutuals, have raised concerns with ASIC about the handling of the "legal proceedings" section of RG 139.Their view is that in cases where the EDR scheme is unable to resolve a complaint the lender would need to be able to institute legal proceedings to preserve assets that would otherwise be lost or diminished without court orders. ASIC said removing the rule might cause significant consumer detriment. It said: "EDR schemes and their debt recovery legal proceedings' jurisdiction play a useful role in assisting consumers and financial investors who may benefit by a hardship variation, need more time to sell their home or may have been granted loans in breach of responsible lending requirements."A number of submissions to ASIC's review argue that a stay on debt recovery legal proceedings should only be permitted when a complaint relates to hardship or an enforcement action. A stay should not be allowed where the complaint is about fees or interest, for example.ASIC decided against limiting the scope of the debt recovery legal proceedings rule, saying such a change might compromise an EDR scheme's ability to meet principles of accessibility, efficiency and effectiveness.However, it did concede that there was a case for excluding certain types of small business lending complaints.