24th June 2024

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Notable increase in complaints seen as cost-of-living woes continue to worsen

Notable increase in complaints seen as cost-of-living woes continue to worsen | Insurance Business New Zealand

Surge in grievances towards financial advisers noted, although overall number of complaints are low

Notable increase in complaints seen as cost-of-living woes continue to worsen

Insurance News

Kenneth Araullo

In the latest report from Financial Services Complaints Limited (FSCL), a notable escalation in financial grievances has been observed for the period spanning July to December 2023.

This independent ombudsman service, which offers free assistance in resolving financial disputes, reported a 17% surge in complaints and an even more pronounced 36% rise in disputes, which are the more serious cases necessitating formal investigation.

A significant portion of the disputes investigated by FSCL, approximately 54%, involved non-bank lenders. This figure marks a 14% increase compared to the same period in the previous year. The higher number of disputes may also reflect a shift in consumer attitude, with individuals becoming less inclined to dismiss grievances and more determined to seek formal resolution.

Susan Taylor, the Financial Ombudsman at FSCL, attributes this increase to the escalating financial burdens on individuals and families, driven primarily by rising living costs and interest rates.

“Following on from last year’s upward trend, our latest statistics are showing no let-up in the number of complaints. Not surprisingly, we are seeing an increase in complaints about lending products (including car loans, personal loans, and credit cards) reflecting what is happening in the wider economy,” Taylor said.

Alongside these trends, there’s a growing recognition of consumer rights, emphasising the crucial role of independent dispute resolution services, especially in challenging economic times.

Additionally, FSCL observed a rise in complaints concerning financial advisers, encompassing mortgage brokers, sharebrokers, and insurance brokers. While the total number of adviser-related complaints remains relatively low, the increase is still noteworthy.

The service also registered a substantial 50% increase in complaints related to transactional service providers, including forex dealers, money transfer agencies, and trading platforms. Taylor connects this surge partly to the consistent number of frauds and scams, alongside the growing popularity of money transfer services. This trend is likely influenced by the resumption of international travel among New Zealanders.

Taylor offered a word of caution regarding overseas money transfers, advising consumers to verify account details thoroughly and ensure the legitimacy of the requestor.

“It’s also important for consumers to contact their lender or financial service provider as soon as they have a complaint as the earlier this is done, the quicker it will likely get resolved. If it can’t be resolved with the financial service provider, then they can bring the complaint to us,” Taylor said.

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