No let up in bank complaints

Deborah Battell. Photo / Supplied

Hardship is keeping complaints to the Banking Ombudsman at record high levels, and the office expects no let up given the effect of the Canterbury earthquake on Christchurch residents and the wider economy.

Banking Ombudsman Deborah Battell said complaints are currently around 1000 a year, about double the level recorded just before the global financial crisis of 2008-9.

"People are under a huge amount of stress and obviously looking for ways to try and cope with the situation," Battell said.

"Right now, we can see hardship underlying a raft of different complaints, including loan defaults, mortgagee sales, allegations of irresponsible lending, complaints about mortgage break fees and applications to withdraw money from KiwiSaver."

Following the Canterbury earthquake, a number of customers have been given repayment holidays on mortgages and other loans. "But it's important that customers understand that interest still accrues while payments are on hold and gets added to their loan," she said.

"Customers should approach their banking service providers about their financial position before they get into arrears. And if they do get into arrears, they need to talk to their providers so that they can try and stop getting further into debt."

Battell said people need to know that it may not be easy to withdraw money from KiwiSaver schemes. She said many applications appear to have low prospects of success.

The Financial Service Providers (Registration and Dispute Resolution) Act 2008, which came into effect yesterday, means the Banking Ombudsman's services now also cover customers of most building societies, the two largest credit unions, some finance companies and a range of bank subsidiaries.