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Busiest year on record for Financial Services Complaints Limited

Ten years after the Financial Service Providers (Registration and Dispute Resolution) Act 2008 was introduced, the first dispute resolution scheme approved under the legislation has had its busiest year yet.

In its annual report released today, Financial Services Complaints Limited (FSCL) reported a 35% increase in complaints opened for investigation in the year ending 30 June 2018.

Complaints against insurers, in particular relating to travel insurance, once again made up the greatest proportion of cases investigated at just over a third. Complaints against lenders were the second largest category at about 21%.

FSCL Chief Executive Officer Susan Taylor said the rise in travel insurance complaints correlated with more Kiwis travelling overseas and more travel insurance being sold.

“We think the overall increase in complaints partly reflects the growing consumer awareness of the dispute resolution services available along with the extra resources we have put into publicising our services and working with consumer advocates. However, there is still room for improvement.”

To that end, Ms Taylor said FSCL has submitted during the year on regulations under the Financial Services Law Amendment Bill, that it should be mandatory for advisers to tell their clients about their external dispute resolution scheme, at the time that a complaint arises.

“The best way for a consumer to find out about us when they need us is through their financial services provider.”

Ms Taylor said responsible lending was a recurrent theme in complaints against lenders and welcomed work to tighten up parts of the Credit Contracts and Consumer Finance Act 2003.

“By and large, we find lenders are complying with responsible lending obligations and are doing their best to help borrowers facing a period of financial hardship. However, we have received complaints where lenders have not met their obligations, which has had severe consequences for borrowers.

She said the proposed changes would give greater clarity around what lenders must do to comply with relevant lender responsibility principles. “This will hopefully make it easier to determine whether a lender has assessed a loan application for affordability and suitability.”

FSCL’s annual report details a case where a couple’s car was repossessed when they defaulted on their loan. They were given two options to retrieve the car – either pay the outstanding amount, or have the loan agreement reinstated by paying the arrears, default and repossession fees.

With Work and Income’s assistance, the couple paid the arrears, default and repossession fees to retrieve the car and reinstate the credit contract. However, the finance company then refused to release the car until they had paid all the outstanding debt on the credit contract.

“We identified a number of concerns with the finance company’s compliance with the Credit Contracts and Consumer Finance Act,” said Ms Taylor.

“Among them, failing to look into the affordability of the lending arrangement, not clearly describing the costs associated with lending and failing to treat customers in default reasonably and ethically.”

FSCL’s investigation resulted in the finance company agreeing to repay the fees and paying $200 as compensation for inconvenience caused by repossessing their car. The car was also returned to the couple.


FSCL’s Annual Report 2017/18 is available on its website at