Keep documents, read them, and ask questions

Keep documents, read them, and ask questions, says Insurance & Savings Ombudsman

26 November 2014

Insurance & Savings Ombudsman Karen Stevens says customers of financial advisers should keep all documents, read them carefully, and always ask questions.

“Most complaints about financial advisers could be avoided if there was more direct discussion between advisers and their clients about the details,” says Karen.

“Financial advisers include mortgage and insurance brokers, financial planners, and people working for insurance companies who give advice. Complaints tend to be about the quality of advice, misunderstandings, fees and charges.”

Karen says a recent complaint to the ISO Scheme was from a couple who were charged a $2,000 fee by their mortgage broker after they’d paid off their loan earlier than expected. “Their understanding was that the broker wouldn’t charge them anything, as he’d explained that the bank paid him a commission.”

However, the broker explained that if the loan was paid early he didn’t receive his commission, and he would invoice his clients. This condition was specified on the broker’s Disclosure Statement that had been given to the couple. The authorisation form, which the couple signed, also referred to the Disclosure Statement.

“So although the fee was a surprise to the couple, they did have the information, and the broker was entitled to charge them,” says Karen.

ISO Scheme tips to avoid problems include:
1. Provide full, accurate information to your adviser.
2. Keep all documentation and read it.
3. Ask your adviser about their fees or charges and when they apply.
4. Ask your adviser to explain how each product works and read their recommendations before making decisions.
5. Keep asking questions until you fully understand.

“We welcome people to contact the ISO Scheme at any time for assistance,” says Karen.

“Our service is independent, impartial and entirely free for consumers.”

Last year the ISO Scheme dealt with the highest number of complaints since 1998, with 3,215 complaint enquiries and 300 complaint investigations about insurance and financial services. Only 2% of complaint enquiries and complaints were about Financial Advisers.

See the ISO Scheme’s new information sheet on Financial Advisers.

www.iombudsman.org.nz

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