New Zealand's banks paid out nearly $450,000 in the last year to settle disputes with their customers through the ombudsman service.

The figure is revealed in the latest annual report for the Banking Ombudsman which was released today.

It showed that while inquiries to the independent and free service rose slightly in the year to June 30, complaint and dispute numbers dipped.

Cases become a dispute when the bank cannot resolve an issue to the customer's satisfaction and someone from the ombudsman service will step in to negotiate an agreement between the parties.


While most cases are solved through non-financial means the number being resolved through settlement rose from 35 per cent to 38 per cent in the last year and the total amount rose 45 per cent to $449,859.

Banking Ombudsman Nicola Sladden said the total had been pushed up by a one off compensation case where a customer was paid out $108,518 by their bank.

But the average payment also rose 20 per cent to $1730.

Sladden said it the service was not about people winning compensation from their bank.

"Ultimately our role is to support a fair outcome."

Sladden said that was the difference between people going to court and using the ombudsman service as it was not about finding a winner or loser but about reaching an agreement between the two parties.

In the last year 44 per cent of its disputes ended with either a part or wholly positive outcome for customers - up from 40 per cent in the prior period.

Banking Ombudsman Nicola Sladden says inquiries were up this year but dispute numbers fell. Photo/Mark Mitchell.
Banking Ombudsman Nicola Sladden says inquiries were up this year but dispute numbers fell. Photo/Mark Mitchell.

Sladden said dispute numbers had fallen but grown in complexity which she put down to banks resolving more problems in house leaving the service to deal with the more difficult and protracted cases.

The biggest area of concern was lending with 31 per cent of its 3323 cases in that area.

Sladden said the scheme had a year of two halves with disputes over how much banks were charging people to break their fixed-term mortgage interest rate spiking up in the first half.

"We got a real increase in complaints for early repayment charges in September and October last year."

Customers are typically charged a fee when they try to reduce the interest rate on their mortgage by breaking a fixed term before it has expired.

Complaints can arise when customers either don't understand at the time they fix the interest rate for loans that they risk being charged such fees, or there is confusion about how banks calculate those fees.

Sladden said complaints about break fees had since plateaued.

Bank accounts were the second most common area to receive complaints at 19 per cent followed by payment systems at 17 per cent.

Service-related issues were the underlying cause in 42 per cent of cases with the main concerns around bank staff failing to act as instructed or promised.

Sladden said it had also seen a rise in scam-related cases this year.

During the year it had 66 bank customers get in contact about scams by third parties where banks had declined to compensate them for their losses.

Sladden said banks were not responsible if customers' actions enabled (even if unintentionally) a scam to succeed.

Across the industry customers of the four big banks - ANZ, ASB, BNZ and Westpac - were less likely to use the scheme while customers of medium sized banks tended to use the scheme more often.

Types of Complaints to the Banking Ombudsman
Enquiries 2458 up 3.6 per cent
Complaints 568 down 1.4 per cent
Disputes 259 down 4.1 per cent
Total cases received 3285 up 2.1 per cent