Wall Street's self-regulator is asking for input from a select group of public advocates, securities lawyers and industry executives on its much-criticized system for arbitrating disputes between customers and brokers.

Complaints about the Financial Industry Regulatory Authority's dispute resolution forum range from charges of a pro-industry bias to a lack of transparency. Some critics also say it fails to adequately check the backgrounds of arbitrators and is too quick to wipe black marks from brokers' public records.

Finra announced on Thursday the formation of a task force of 13 lawyers, academics, and industry and consumer representatives to review the system. Arbitration is typically mandatory in cases where customers feel a broker is to blame for an investment loss.

"We've made some pretty dramatic changes in the arbitration process in the last few years" in an effort to improve it, said Finra's chairman and chief executive Richard Ketchum. "At the same time, I guess, arbitration remains a controversial thing, with a lot of criticism coming from both sides."

"A lot of times there has been more heat than light in that criticism," Mr. Ketchum added. "It's time for us to get a hard, fresh look at how the process has changed and how it should change more."

The task force will decide itself what issues to focus on, Finra said.

"We have a list, but we think it's important for the group to set the agenda," said Linda Fienberg, head of Finra's dispute resolution and disciplinary hearing programs.

Barbara Roper, the director of investor protection at the Consumer Federation of America is a member, as are lawyers from Citigroup Inc. (C) and Morgan Stanley (MS). Barbara Black, a professor of corporate law at the University of Cincinnati, is going to chair the task force.

The group is expected to come together for the first time in late September or early October, and wrap up with recommendations of how to better protect investors and their shaken confidence in capital markets within one year.

Finra has more proposed changes already pending. One would ban a common tactic used by brokers who want to wipe customer complaints from their publicly available records, while another would tighten restrictions on the use of industry insiders as arbitrators.

Write to Matthias Rieker at matthias.rieker@dowjones.com

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