Financial Ombudsman, Susan Taylor, is urging consumers to speak to their lenders as soon as they begin to struggle making loan repayments, as the free financial dispute resolution service sees a marked increase in complaints.
Ms Taylor’s comments come as Financial Services Complaints Limited (FSCL) records a 17.5% increase in complaints received in the 6 months from July to December 2022.
“From higher cost of living costs and interest rates to back-to-school expenses for a lot of families, we are seeing the increasing financial pressure on consumers translating to an increase in complaints,” Ms Taylor explains.
Ms Taylor adds that while complaints are up, the number of disputes (cases formally investigated) is on par with the same time last year.
“This may in part be due to our scheme members doing a good job of resolving the complaints that we send on to them through their internal complaints process, sometimes with guidance from our team.”
Complaints about (non-bank) lenders make up about 64% of the complaints received, with lender complaints up about 7% on the same period last year.
“As highlighted in Infometric’s report released earlier this week, there is unlikely to be any cost-of-living respite for New Zealanders this year. With higher interest rates and increasing pressure, it is important that struggling consumers seek help from a financial mentor, or budgeting service sooner rather than later. The sooner a borrower contacts the lender, the more likely that the lender will be able to provide some hardship relief” says Ms Taylor, adding that lenders are required under the Credit Contracts and Consumer Finance Act (the Act) to have a hardship policy and comply with the hardship provisions of the Act, and the Responsible Lending Code (the Code).
Interestingly, FSCL has also seen an increase in complaints about transactional service providers (80%) which are forex dealers, money transfer agencies and trading platforms.
“A number of these complaints have been about fraud and indicates consumers may be trying to alleviate the financial squeeze through “get-rich- quick” scams. The consumer has sent money off-shore for investments/ Bitcoin via a transactional service and then looks to blame the money transfer agency once they realise, they have been scammed,” says Ms Taylor.