A proposed financial dispute resolution centre will have just 20 core staff and outsource mediation for major claims after legislators labelled the plan too expensive yesterday. The undersecretary for financial services and the treasury, Julia Leung Fung-yee, said the government planned to set up the centre around the middle of next year with only a small team of in-house mediators to handle investors' claims under HK$100,000. For claims from HK$100,000 to the maximum HK$500,000, the centre will outsource mediation. 'This would allow the centre to be more cost effective and maintain a lean staff structure,'' Leung said. ''We'll review the staff structure when the centre starts operating.' . The decision to set up the resolution centre follows the Lehman Brothers minibonds controversy, which erupted when more than 20,000 investors complained they had been misled by banks and brokers to buy products linked to Lehman. Their investments became worthless overnight after the US investment bank collapsed in September 2008. The proposed centre will have mediators to arrange talks between customers and banks, brokers and fund houses on disputes relating to credit cards, loans, stocks, funds and other investment products. However, the mediator will only be able to help the parties reach voluntarily settlement and will have no power to adjudicate or order compensation. If the mediation process fails, investors will be able to opt to have an arbitrator rule on whether or not the financial institution will have to pay them compensation. The centre, which will need HK$15 million to set up and an operating cost of HK$55 million a year, will be funded by the government, the Securities and Futures Commission and the Hong Kong Monetary Authority for the first three years and by financial institutions thereafter. The government yesterday told legislators it would need to give a total of HK$92 million to the centre for the first three years. Financial services sector legislator Chim Pui-chung said the running cost was too high while Democratic Party legislator Albert Ho argued the centre would have no teeth as the mediators could not investigate or discipline bank or brokerage staff. 'I do not think the proposed centre has sufficient powers to protect investors. Is it worth spending so much money to operate a centre which has no investigative power?' Ho asked. Leung said the centre's mediators could report any alleged malpractices to the SFC and the HKMA for further investigation. 'The mediations are an alternative to allow investors to seek claims from financial institutions,'' she said. ''They won't affect the investigation work of the regulators concerned.' Legislators will have more discussion before voting on the funding. Crunching the numbers The government's three-year funding deal will cost it $HK92m The proposed core team of in-house mediators working at the centre will number just: 20