Jon Duffy

Consumer NZ

Shortened by Editor

Financial Disputes Resolution

The are four schemes providing financial dispute-resolution services in Aotearoa:

• Banking Ombudsman (BOS)

• Insurance and Financial Services Ombudsman (IFSO)

• Financial Services Complaints Ltd (FSCL)

• Financial Dispute Resolution Service (FDRS)

All financial advisers and financial services providers must belong to one of these schemes. You can find out which scheme your provider belongs to by asking them, or by checking the register on the Companies Office website.

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If you can’t resolve an issue with your provider, you can escalate your complaint to the scheme that your adviser or provider belongs. You must use the scheme your provider is signed up with – you can’t take your dispute to another scheme.

The schemes can investigate these types of complaints about their members:

• any breach of contract with a consumer

• not following industry codes of practice (which may include not dealing fairly or responsibly with a consumer)

• conduct that is not fair or reasonable in the circumstances

• breaking the law.

​A provider who doesn’t belong to a scheme is no longer authorised to give financial advice and can be prosecuted by the Financial Markets Authority for continuing to act as an adviser.

In July 2024, the maximum financial compensation available across all the schemes went up to $500,000 +GST. If you have a complaint over that threshold, court is your only option to resolve the dispute.

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The maximum compensation for non-financial loss, such as stress and inconvenience, has increased to $10,000 +GST. 

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The schemes can’t investigate:

• a provider's commercial judgement (for example, whether an investment is suitable for you), unless it breaches a code of practice that the provider was bound by

• a provider's interest rates or standard fees and charges

• a product's investment performance

• events that took place before the establishment of the scheme, or before a provider belonged to the scheme (with the exception of FSCL, which can hear complaints from April 2010, even if a member didn’t belong to the scheme at that point), or more than 6 months prior to the complaint

• complaints that could be better dealt with by another body (such as the Commerce Commission), or have already been made to another body (such as the courts), or have already been investigated by the scheme (although BOS members can agree to a complaint being re-investigated and can also agree to waive the time limitations)

• complaints they regard as "frivolous" or "vexatious".

There are five steps to the complaints process.

Step 1
You must use your provider’s internal complaints process first. Many problems are minor misunderstandings that can be resolved directly. Your provider has a set time to respond to your complaint – about 3 months.

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​Step 2
You must take your complaint to a dispute-resolution scheme within 2 months of deadlock occurring.

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​Step 3
The scheme gathers information from you and the provider. Your dispute may be resolved at this stage – but if it’s not, it goes on to the next step.

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Step 4
This is the investigation and mediation stage. The goal is to reach an agreement. If this doesn't happen or the meetings don't take place, the scheme will recommend a settlement based on the information that it’s collected. If you don't accept this settlement, the dispute goes to the final step.

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Step 5
The scheme imposes a final decision. If you accept this decision, then it’s binding on the provider. If you don’t, then the case is closed, and you can pursue your complaint further through a disputes tribunal or the courts.

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For the full article click HERE. 

Disclaimer: Jon Duffy, Consumer NZ chief executive, is on the board of the Banking Ombudsman.