Call us: 0800 347 257

Life is inconvenient

Khalid was experiencing financial hardship and needed to urgently withdraw funds from his KiwiSaver account to pay rent arrears.  Khalid called his KiwiSaver provider and asked for a form to withdraw funds from his account on the grounds of significant financial hardship.  During the same conversation, Khalid was told his KiwiSaver balance was $2,800.

Sometime previously Khalid had successfully withdrawn funds from his KiwiSaver to pay rent arrears.  Khalid had been able to submit his application and supporting documentation electronically.  However, when he tried to email the application this time, a staff member contacted him and asked him to return the application either in person, or by post.  Khalid considered the staff member was deliberately making the application process difficult for him.

After delivering the application in person, Khalid was advised that the maximum he could withdraw was $800 and he would need to submit additional information, including proof that he had used the funds withdrawn earlier for rent arrears.


Khalid’s view

Khalid complained to his KiwiSaver provider that the request for more information was intrusive, irrelevant, injured his feelings and caused himself and his family hurt and embarrassment.  Khalid felt he had been treated differently from other applicants, and asked for an apology and $5,000 in compensation for inconvenience.

The KiwiSaver provider explained that it had changed its processes between Khalid’s applications, and now required original documentation to support all hardship applications.  The KiwiSaver provider apologised for the incorrect balance given in the first conversation, explaining the balance included the $1,000 government contribution and tax credits, which Khalid was not entitled to withdraw for significant financial hardship.  The KiwiSsaver provider then explained the additional information sought was based on its experience of the information required by the fund’s trustee.  The Kiwisaver provider requested the information to speed up the process when the trustee assessed the application.

Khalid then complained to FSCL.



We acknowledged the KiwiSaver provider had caused Khalid some stress and inconvenience by failing to advise the correct amount he would be able to withdraw through the financial hardship process.  There was also some delay with the implementation of a new hardship application process. 

However, we explained that the significant financial hardship requirements are difficult to meet.  The KiwiSaver provider was asking for additional information to make the process easier and smoother, and not to pry into Khalid’s personal affairs.  The information requested was relevant to the process, and there was no suggestion it would be used outside the purpose for which it was collected.

We were satisfied Khalid had not experienced a direct loss, and turned our attention to whether the inconvenience caused warranted something more than the apology offered by the Kiwisaver provider. 

We noted the misunderstanding about the amount available to Khalid to withdraw was short-lived.  The KiwiSaver provider had responded promptly to the complaint, apologising for the inconvenience caused.  We were satisfied the inconvenience caused was within the tolerance that can reasonably be expected in the course of everyday life.



Khalid responded that he did not accept our view, and wondered whether the KiwiSaver provider would be prepared to pay compensation of $2,000.  The KiwiSaver provider came back with an offer of $200 which Khalid accepted.


Our insight

Our terms of reference allow us to award compensation for direct loss and inconvenience.  Direct loss is money that has been lost as a result of a scheme participant’s action or inaction.  Inconvenience is harder to quantify, but is designed to compensate a person for the intangible, difficult to measure, consequences of wrong or poor advice.

However, inconvenience is an inevitable part of everyday life.  The fact that an event has occurred, prompting a complaint to FSCL, will not automatically justify compensation for inconvenience.  We must be satisfied there is something to move the situation beyond what is an acceptable part of human interaction.