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'Dispute resolution scheme records number of complaints'

Contributor:
Fuseworks Media
Fuseworks Media

As the economic impacts of the Covid-19 pandemic become more apparent following New Zealand’s lockdown earlier this year, Financial Services Complaints Limited (FSCL) has received an unprecedented level of complaints this year, recording the busiest annual demand for dispute resolution in the organisation’s 10-year history.

FSCL, a dispute resolution scheme approved under the Financial Service Providers (Registration and Dispute Resolution) Act 2008, released its annual report today, highlighting a 36% increase in complaints opened for investigation in the year ending 30 June 2020.

FSCL Chief Executive Officer, Susan Taylor, says that although the organisation had been busy with new travel insurance complaints, case numbers were already up across the board in the first half of the reporting year.

"We hope the increase reflects both our consumer outreach and our scheme participants more readily referring clients who have unresolved complaints to FSCL."

In FSCL’s annual report released today, complaints against insurers remained the largest proportion of cases investigated at 25%. The second largest category was complaints against lenders at 29%.

Although last year consumer credit was the financial product most complained about, this year FSCL saw travel insurance once again make up the largest complaint category at 27%.

With hundreds of New Zealanders having their travel plans disrupted or cancelled due to Covid-19, the rate of travel insurance complaints increased greatly in the last 6 months of the reporting year.

"Some travel insurance policies have a blanket exclusion for loss resulting from a pandemic, but other insurers rely on ‘government intervention’ exclusions to decline claims," explains Ms Taylor.

Consumer credit complaints made up 22%, with FSCL receiving more complaints than last year about mortgage loans and travel cards, but fewer complaints about trading platforms, credit cards and KiwiSaver.

"We urge lenders to make sure the borrower understands the agreement they are entering into and that any insurance product is suitable for that particular borrower’s needs," said Ms Taylor. FSCL’s Annual Report highlights a case where a particularly vulnerable borrower was sold credit-related insurance of little value to him.

FSCL has also seen a small increase of complaints from consumers related to serious financial hardship as a result of job loss due to Covid- 19. Facing reduced income, some feel that their lender was not giving them sufficient relief.

"We expect to see more of these complaints as the various government financial relief packages end in the next few months."

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