Busy year of complaint resolution and regulatory reform for Financial Services Complaints Limited

Dispute resolution scheme Financial Services Complaints Limited (FSCL) has had another busy year, investigating 258 cases and resolving close to 5,000 complaints and enquiries from consumers about financial services.

In its annual report 2018/19 released today, FSCL reports a similar level of cases opened for investigation as 2017/18 (282 compared with 288), reflecting that this high level of dispute intake (up 35% on previous years) is the new norm.

Chief Executive Officer Susan Taylor says FSCL’s experience dealing with consumer issues across the financial services sector enables it to provide valuable insight and input into the raft of law and regulatory reforms currently underway. This includes the Financial Services Legislation Amendment Act and reviews of the Credit Contracts Consumer Finance Act, Fair Insurance Code and insurance contract law

“All these moves aim to lift industry standards and to improve the customer experience when dealing with a financial adviser or financial service provider. This can only be positive for the industry and for people who use these services.”

Ms Taylor says that, as in previous years, a significant portion of FSCL’s investigations in 2018/19 were about lending issues, with complaints about consumer credit making up the highest proportion of complaints investigated at 19%.

“This highlights the need for further reform of the Credit Contracts and Consumer Finance Act, to build on the 2015 reforms which introduced – among other things – the responsible lending principles.”

FSCL’s annual report details a case where a mobile trader failed to make any checks that a customer could afford the repayments on a phone she purchased, then sold her debt to a debt collection company when she was unable to do so. It was only through the actions of FSCL that legal proceedings were halted and the mobile trader agreed to write off the debt.

Ms Taylor says while the vast majority of lenders are complying with their responsible lending obligations, the case highlights the concerning and ongoing problem of those who are not – and the serious consequences for consumers.

“The case also highlights the problems that arise when debt collection agencies become involved with an unpaid debt, which can place a further layer of unnecessary stress on consumers,” she says.

“The amendments to the Credit Contracts and Consumer Finance Act will increase lenders’ disclosure requirements when involving a debt collector and are a welcome proposed change to consumer credit law.”

FSCL’s Annual Report 2018/19 (including the full case study) is available on its website at www.fscl.org.nz/publications