Kiwis in dark over financial dispute service

New Zealand law requires financial advisers, brokers, lenders, insurers and fund managers to be members of an approved dispute resolution scheme. Photo / Thinkstock

Many New Zealanders who may have a legitimate gripe with their financial services provider are missing out on the chance to a fair hearing, says the head of a dispute resolution service.

Susan Taylor, chief executive of Financial Service Complaints Limited (FSCL), said her scheme had seen a 100 per cent increase in cases over the last six months.

But awareness of the financial services disputes regime and the role of dispute resolution schemes was still lower than it should be, she said.

"Many New Zealanders are unaware they can seek free and independent help with problems they have with their financial services provider.

"Even among professionals such as solicitors and accountants, understanding of the role and powers of the financial services dispute resolution schemes remains low."

New Zealand law requires all financial services providers - including financial advisers, brokers, lenders, insurers and fund managers - to be members of an approved dispute resolution scheme.

FSCL was the first of four such schemes to be approved by the Minister for Consumer Affairs under the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

It has 5500 members and received 744 enquiries or complaints in the six months to the end of December.

Many of these were able to be resolved over the phone but 75 resulted in formal investigations by the service, which has the power to award compensation of up to $200,000.

Of the cases it resolved, about 42 per cent were complaints against insurance companies. Complaints against lenders and finance companies made up about 16 per cent.

The most complained about product was travel insurance, followed by consumer credit agreements.

Taylor said FSCL encouraged its members to keep clients aware of the disputes regime but the number of cases remained low.

"Not only does this cost consumers, but also our participants, who lose the chance to rectify a problem and keep a customer happy."

Disputes resolutions schemes did not take sides and were neither regulators nor judges, Taylor said.

"While we have the power to make a formal ruling that is binding on our participants, our job is to listen to both sides and help them come to a resolution they are both happy with."

FSCL is a free, not-for-profit service which deals with complaints through conciliation and negotiation.

The other three dispute resolution schemes in the financial services industry are the Banking Ombudsman, the Insurance and Savings Ombudsman and the Government's reserve scheme, Financial Disputes Resolution.

For more information about the financial services disputes resolution regime click here.