Financial complaint numbers at historically high levels - Financial Ombudsman

The Financial Services Complaints Limited received 1469 complaints in the year to June 30. Photo / 123RF

Financial complaint numbers remain at historically high numbers and show no sign of easing, the Financial Ombudsman says.

New annual figures show the complaints service received 1469 complaints in the year to June 30, up from 1426 the previous year.

“We’re not yet seeing signs of complaints reducing since increasing rapidly two years ago in the wake of Covid-19,” said Financial Ombudsman Susan Taylor.

“What’s changed is the spread. Complaints are now more evenly distributed across a broader range of financial services, rather than being concentrated in just a few areas like non-bank lenders.”

Lenders accounted for the largest share of complaints at 38%, though many were resolved before escalating to a dispute needing formal investigation.

Dispute numbers rose by 4% overall, with a noticeable shift in the types of issues and sectors involved.

Of the 366 cases that were formally investigated, complaints about financial advisers — including mortgage and insurance brokers, as well as wealth advisers — made up the largest proportion at 23%, followed by complaints about lenders at 20%, and insurers at 17%.

Taylor said one emerging trend was the rise in complaints from small businesses.

“This likely reflects the tough trading environment many small business owners are facing.

“They’re under pressure - and we’re seeing that come through in the disputes they bring to us.”

Woman almost loses home

In a recent case, a woman discovered she had been added as a guarantor on her husband’s business loan, without her knowledge or consent.

When the business later defaulted, the family home was at risk of a mortgagee sale.

In this case, the lender offered to put the matter right by agreeing to extinguish her guarantee and release the security from the woman’s half-share of the family home.

“The case highlights the importance of giving clear explanations and proper disclosure to all parties to a loan, including guarantors of business debt, especially when small businesses are borrowing under stress,” Taylor said.

“Many of these issues could be prevented altogether with clearer and personal communication by the lender to the guarantor.”