Surge in bank complaints has ombudsman on run

By ELLEN READ

Poor returns from managed funds are making extra work for banking ombudsman Liz Brown.

She is investigating 37 complaints about investment advice or products provided by banks. Usually she has just two or three investigations at any one time.

"It is stating the obvious to say that the recent poor returns on many managed funds lies behind the high level of complaints," Brown said.

Many complaints expressed a customer's disappointment but did not point to bank failure, Brown said.

Others clearly showed customers did not understand their investments, she said, adding that this did not mean banks gave misleading advice.

Some customers' assumptions were "quite bizarre and so far from reality" that an adviser would be unlikely to identify them, she said.

One woman's complaint said she understood positive and negative returns were like a pregnancy test - if it's positive there's something there, it it's negative there's not.

Not quite - if it's negative the customers could lose a chunk of their capital, Brown said.

Customers making investment choices after just one meeting with an adviser concern her.

Banks' investment statements were well written, but people needed time to read them carefully, she said.

Brown said the minority of complaints were legitimate cases of people receiving inappropriate investment advice. For example, elderly people making long-term or high-growth investments when a shorter term income-producing one would suit their needs better.

Compensation and return of lost capital can be required in such cases. Brown said the savings and investment ombudsman was dealing with a similar influx of complaints.