Financial Ombudsman and CEO of Financial Services Complaints Limited (FSCL), a free Ombudsman and dispute resolution service, Susan Taylor, is reminding consumers that if something has gone wrong with a lender, there is free, accessible help available.
“Not only is our service free, but we can provide borrowers with a remedy, where appropriate, including writing off debt and fees, if it is found that lending was unaffordable or unsuitable and a lender did not comply with the CCCFA (Consumer Credit Contracts and Finance Act)’’, explains Ms Taylor.
FSCL is one of four free dispute resolution services (DRS) in New Zealand, the other three are the Banking Ombudsman Scheme (BOS), The Insurance and Financial Services Ombudsman (IFSO) and Financial Dispute Resolution Service (FDRS).
Citing a recent case note as an example of how FSCL helped a borrower, a consumer was refunded all interest and fees for a loan that was determined to have been unaffordable.
Fang borrowed $25,000 in September 2015 over a 60- month loan term, with monthly payments of $800. She then borrowed another $20,000 a year later but, when her partner became ill and she could not keep up with the payments, a dispute over the original affordability of the loan arose.
During FSCL’s investigation, the case manager discovered that the lender had not done their due diligence in terms of assessing the affordability of the loan.
“Lenders must make reasonable enquiries into a borrower’s income and expenses to be satisfied that the loan is affordable for the applicant and does not put them into substantial hardship,” explains Ms Taylor.
“It is also important to remember that before taking out a loan, whether it is a personal loan, or a car loan, borrowers should make sure they have given accurate information about their income and expenses to the lender, they can seek advice, and should be careful to ensure they understand the terms of the loan before taking on the debt.’’
Ms Taylor reiterated that a consumer can call a DRS if they think something has gone wrong with a loan or other type of financial service.
“Where appropriate, we can also escalate systemic issues to the regulators, including the Commerce Commission. This is an important part of our role,” she says.