A woman was sold a $3990 vacuum cleaner by a door-to-door salesperson and was in line to pay more almost $1500 in interest before intervention by a financial complaints service.

Betty (not her real name) signed a 36-month finance agreement when taking on the expensive vacuum cleaner and got a $700 discount on the $3990 purchase price when trading in her old model for the new one.

But Betty made only four payments of $31 before falling into arrears after having surgery.

Debt recovery action was issued against her and she returned the unused vacuum cleaner but still owed $1072 due to debt collection fees.


After Betty complained to the Insurance & Financial Services Ombudsman (IFSO) the company confirmed it would write off her outstanding loan debt, and would not pursue her further.

The ombudsman's case manager believed the finance company did not obtain all the relevant information about Betty's financial situation, prior to entering into the loan.

"For example, Betty had not listed any expenses for transport in the income and expenses form," the IFSO said.

"She said she owned a house, but there were no rates payments listed. The case manager also believed the bank statement the credit provider relied on did not provide sufficient transactions to verify Betty's income and expenses."

The complaint was one highlighted by the Insurance & Financial Services Ombudsman's annual report.

The report, released today, says there were 320 complaints in the 12 months to June - the highest number in 20 years.

"The increase in complaints could reflect an increase in awareness about our free and independent service, and the right to complain about insurance or financial services, Insurance & Financial Services Ombudsman Karen Stevens said.

Stevens said the most complaints were about general insurance, followed by health, life and disability insurance.

There were 206 general insurance complaints (64 per cent of all complaints), which includes house (85), travel (46), vehicle (35), and contents insurance (21).

Nearly 100 complaints (or 31 per cent) were about health, life and disability insurance - 36 were about health, 25 life, 21 income protection, and 13 trauma insurance.