Most initial complaints need to be directed to the KiwiSaver provider (which is sometimes a bank) that sold the product. If it's a complaint about the serious financial hardship process then it is heard by the provider's trustee - a third-party organisation that oversees KiwiSaver funds.
In some circumstances the Inland Revenue Department (IRD) and Financial Markets Authority (FMA) receive complaints.
If those complaints fail, the next step is to go to one of four dispute resolution services, which hear complaints against KiwiSaver providers, trustees and also financial advisers who may have given KiwiSaver advice. The four are the Banking and Insurance ombudsmen's services, Financial Services Complaints Limited and Financial Dispute Resolution Service. Providers, trustees and financial advisers must belong to one of them and it's up to the KiwiSaver to find the correct one.
The vast majority of complaints that make it through to the dispute resolution services are for financial hardship withdrawals that have been declined. Susan Taylor, chief executive of Financial Services Complaints Limited says as many as 80 per cent of complaints about financial hardship withdrawals being declined are not successful.
To be successful with a financial hardship withdrawal, says Bruce Kerr, executive director of Workplace Savings, KiwiSavers must be able to show and back up with bank statements that they are unable to meet minimum living expenses.
This isn't black and white, says Kerr. The trustees aren't there to make value judgments on people's lifestyle choices. Whether they smoke cigarettes, have a Sky TV connection and eat takeaways isn't always a reason to turn people down. The trustees aren't there to make moral judgements on people's profligacy, says Kerr. If they can't pay their mortgage or rent, food and utilities bills they could be entitled to a withdrawal. Some complaints come about because the KiwiSaver hasn't provided sufficient evidence.
Workplace Savings has been working with trustees to ensure consistency in the way the rules are applied. It has produced processing guidelines for its members to follow and is reviewing those guidelines. The issues outlined in the guidelines include tricky questions such as social and entertainment activities, ownership of more than one car, tithing, alcohol and cigarette costs, luxury housing, gambling and situations where mortgages could have been refinanced to reduce payments.
One big problem with making any complaint at all about KiwiSaver is that the system is confusing for those not in the industry and information is hard to find. My bank's KiwiSaver landing page has no information about how to complain.
To test what customers might be told I called the bank's KiwiSaver helpline to ask the name of the trustee company. I was put on hold for seven minutes while the staff member checked, then told that her colleagues didn't know the name of the trustee and I should call an 0800 number, which turned out to be the Banking Ombudsman's phone number, not a trustee company at all.
I ended up calling three separate helplines at the bank and being given incorrect information by all three. The final one said I only had five days to complain after a serious financial hardship withdrawal was declined or the "application has closed and there is nothing more for us to go through". No mention of an ombudsman or other dispute resolution service.
My calls to the bank came just days after being told by Taylor that she believed the numbers of KiwiSaver complaints reaching her office were very low because people weren't being told of their rights.
Those who do make it to a dispute resolution provider get the equivalent of a judicial review, says Taylor. There is no cost. "We review the [provider or trustee's] decision to ensure that they have correctly applied the [KiwiSaver] Act and they have taken into account all the relevant circumstances," says Taylor.
The trustees and dispute resolution services do find themselves assessing complicated circumstances. Taylor cites the case of one complainant who had lost his self-employed contract. He anticipated that he wouldn't be able to pay his bills in the near future. But to qualify for a withdrawal he had to be unable to pay them at the time of application. His complaint was not upheld.
There have been instances of complaints by bankrupts having serious financial hardship claims declined. That's because the Official Assignee may be able to take the money to repay creditors even after the bankruptcy has been discharged. More information about this can be found on Chapman Tripp's website at tinyurl.com/kiwisaverbankruptcy
The requirements for early withdrawals - for first-home purchases and serious financial hardship - aren't necessarily easy for everyone to understand, which has led to some very upset savers.
For example the Insurance & Savings Ombudsman heard one case in which a member thought he could apply after buying his first home. He had borrowed money from his parents and promised it would be repaid from his KiwiSaver withdrawal. Only he wasn't entitled to one.
In another case heard by the same ombudsman a KiwiSaver applied for first-home withdrawal three days after the house deal went through. This was too late and the ombudsman largely agreed with the provider's decision to turn down the withdrawal for not meeting the requirements.
There are often situations that savers couldn't have anticipated at the time of joining KiwiSaver. In one case a couple wanted a first-home withdrawal for an Australian property. One of the couple's KiwiSaver providers allowed the withdrawal and the other didn't. The couple complained to the Banking Ombudsman, who didn't uphold the complaint. Ombudsman Deborah Battell noted in the case notes that although the KiwiSaver Act does not say whether money can be withdrawn for an overseas purchase it does say that the money must be paid to a "practitioner with a New Zealand practising certificate".
The IRD administers KiwiSaver contributions - passing them on from employers to providers. It sometimes receives complaints. The two main complaints that the IRD receives are of deductions being made during contributions holidays and from KiwiSavers being unable opt out. In the case of deductions during contributions holidays, members can get refunds, but they are often unhappy with how long it takes. The IRD has to request the funds from the KiwiSaver provider. In the case of opting out, the IRD fields a lot of calls from "frustrated" customers who "do not quite understand the rules", a spokeswoman said.
The public can also complain to the FMA. The FMA's job as regulator is focused on monitoring and enforcing the legislation. It looks for practices such as mis-selling, poor advice and questionable documentation. It has taken action against door-to-door KiwiSaver sellers acting outside the rules.
The FMA wants to hear from KiwiSavers who have been encouraged to switch to their bank without sufficient advice, or as has been happening, by being tricked or forced to sign a KiwiSaver transfer form. There have been instances where such forms have been stacked in with a pile of loan documents or the person has been told a loan application will be viewed more favourably if they switch their KiwiSaver to the bank. These switches aren't always in the customer's interests.
