Ombudsman reflects on 14 years' work

Liz Brown. Photo / Herald on Sunday

Liz Brown describes her last year in the job of Banking Ombudsman as "a bit heavy".

Brown stepped down last week after 14 years in the role of keeping the retail banks honest.

Her retirement comes as complaints to the Ombudsman's office hit their highest level - up over 100 per cent on the previous year.

The number of cases requiring formal investigation trebled in the year to June, and the office was forced to instigate a waiting list for the first time in its history.

The huge increase in workload did not come as a complete surprise to Brown, who says levels of complaints have always ebbed and flowed with the state of the economy.

"I could see well over a year ago that we were going to have an increase in work. But I hadn't anticipated quite so much."

A complicating factor was fund manager ING's freezing of its two credit crunch-affected investment funds in March 2008. The funds had been sold to many elderly mum and dad investors through the ANZ Bank.

Dealing with the ensuing flood of complaints to the Ombudsman's office will go on well into next year, Brown says.

She says an increase in complaints about investment advice was also to be expected - "because when the markets fall it tends to show up any flaws there may have been in the selling process" - but not on this scale.

The nature of the complaints was perhaps the most difficult part, Brown says. The typical case was an older couple who had worked all their lives, built up a bit of a nest egg and relied absolutely on their bank for advice, only to face the prospect of their savings disappearing. "There were some very sad cases there."

The other major issue to keep the Ombudsman's staff busy has been complaints about mortgage break fees.

Most of those came from people locked into five-year terms who received a shock to find out what it would cost them to get out of it.

The problem has been the size of the break fees, and the fact that there is a whole generation of bank staff who have never experienced an environment of such sharply falling interest rates.

In some cases mortgage holders were told when they inquired that the break fees would only be a few hundred dollars.

"And you can see that's quite credible if you've got young bank staff who have never seen a break fee that's more than $200 or $300," she says.

As the recession drags on the office is seeing a continuing increase in complaints linked to financial hardship - individuals and businesses claiming the bank is not making allowances or supporting them the way they feel it should.

The past 12 months may have been huge but the increase in complaints has not been linear over Brown's 14 years.

There was a big increase at the end of the 1990s and numbers hit a high spot in the early 2000s.

However Brown says the banks can also take credit for improving customer service over this period, and for setting up better complaints-handling procedures.

Back in 1995 the banks took a litigation attitude and in some cases complaints were handled by the legal department, she says.

These days many issues are sorted out in-house.

Brown is succeeded by former Commerce Commission director of competition Deborah Battell.