Complaints have continued to increase in the past year, reports Financial Services Complaints (FSCL), a Financial Ombudsman Service, with the highest number of complaints and disputes received since the service started in 2011.  

Financial Ombudsman, Susan Taylor, says “although the pace of growth has slowed this year, all our numbers – complaints and disputes – were new records for our service.

Complaints were up by 6% at 1,426 and new disputes received (cases the service formally investigates) by 10% at 359. There was also a 33% increase in completed investigations. 

"The steady increase in complaints reflects the challenges in the wider economic environment," says Ms Taylor. "We expect this high level of complaints to persist as long as economic conditions remain difficult. The new rules increasing our financial loss compensation to $500,000 (previously $350,000), which took effect in July, could also lead to a further rise."

Complaints about lenders made up the greatest proportion of complaints investigated as some people continue to struggle with managing loans, particularly car, personal and small business loans. Of the cases formally investigated, the largest proportion of complaints were about consumer credit products at 29%, followed by credit cards at 14% and mortgage loans at 11.5%.

Complaints against financial advisers (18%), insurers (14.5%) and card issuers (14%) were also up in numbers on last year.

Of the wide variety of complaints seen by FSCL, some of the common issues for consumers were around financial hardship, miscommunication, fraud and scams, and business loans. 

Ms Taylor says, “under the Credit Contracts and Consumer Finance Act 2003 lenders must consider hardship applications from borrowers whose financial circumstances have unexpectedly changed and offer temporary relief, but not if borrowers cannot resume payments. 

“It’s important for consumers to contact their lender or financial service provider as soon as they experience hardship or have a complaint as the earlier this is done, the quicker it will likely get resolved. If it can’t be resolved with the financial service provider, then they can bring the complaint to us.”

Miscommunication is also central to many complaints FSCL investigate says Ms Taylor. “This can include breakdowns in passing on important information, poor understanding of clients, and ambiguous or poorly worded communication.’’

A recent FMA research report shows that New Zealanders generally agree on what constitutes fairness in financial services. However, only 74% expect fair treatment from their financial service provider. 

“I’m pleased to report, we’re starting to see an increasing number of our financial service providers just ‘doing the right thing’ by concentrating on a fair outcome for their clients and customers, says Ms Taylor. 

In a recent case, a lender agreed to reduce the loan amount for a woman who had been added as a co-borrower while in an abusive relationship.

“Although the lender had not done anything wrong, they could see that the right thing to do was to significantly reduce Sarah’s* debt. We were pleased to see a lender taking a compassionate and pragmatic approach to this situation,” says Ms Taylor. 

If people have a problem with a financial service provider, they can make a complaint to FSCL at www.fscl.org.nz, by calling 0800 347 257, or by emailing complaints@fscl.org.nz.

*Our case notes are anonymised. We have changed names and other identifying information to prevent consumers and financial service providers from being identified. 

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