KEY POINTS:
There is an inevitable link between falling investment markets and rising consumer complaints against financial firms.
But, in such times, it can be difficult to distinguish between genuine grievances and chancers looking to offload some responsibility for their own stupidity.
In New Zealand a couple of financial services complaints bodies have been set up to help this process of differentiating between the righteous and the fatuous. The Banking Ombusdman (BO) and the Insurance and Savings Ombudsman (ISO) do a pretty good job, within their limitations.
Their limitations are quite significant, however. While both are funded by their respective industries, the BO and ISO are independent or 'arms-length' organisations. The problem is their jurisdictions are fairly narrow.
A lot of cases fall through the cracks. For example, the lack of a decent independent complaints body for finance company investors was partly why the consumer action group Exposing Unacceptable Financial Activities quickly built up such a strong following. Likewise for the financial advisory industry.
Legislation passed in September, the Financial Services Providers (Registration and Dispute Resolution) Bill should, eventually address the patchy and inconsistent complaints process for consumers.
In the meantime, however, if a complaint isn't covered by the BO or ISO an expensive court action may be the only answer. And the existing complaints bodies are feeling the pressure.
The BO, for instance, reported an almost 40 per cent increase in its caseload over the last year - mainly due to complaints about ING CDO funds sold through ANZ advisers.
There is a gaping hole, too, in the KiwiSaver process. Amazingly, no KiwiSaver complaints body was set up under the law - unlike Australia, which has the Superannuation Complaints Tribunal. As it stands, complaints go first to the KiwiSaver provider and/or the trustee.
Failing that, consumers are free to complain to the Government Actuary - which has a staff of three and a half people catering to the 800,000 plus KiwiSavers.
David Chaplin
photo: A meeting of consumer action group Exposing Unacceptable Financial Activities earlier this year. Greg Bowker
