Bank complaints have spiked up more than 20 per cent to a five year high in the wake of intense scrutiny on the sector.
There were 3108 complaints in the year to June 30 up 21 per cent from 2565 in the prior period, figures from the Banking Ombudsman show.
Total cases which include enquiries rose 21 per cent to 4797 while disputes - the most serious of cases were up 27 per cent to 183.
Banking Ombudsman Nicola Sladden said the increase was driven by the heightened awareness of issues in the banking sector after Australia's Royal Commission and a culture and conduct review by New Zealand's regulators the Financial Markets Authority and the Reserve Bank.
"We've seen this coming through in our cases. We've had more cases, and they are more complex."
Sladden said lending was the most common area of complaint followed by bank accounts and payment systems but all areas of banking had generated more complaints.
There were 1104 lending complaints up from 1005 in the prior year and 1062 complaints relating to bank accounts - up from 902.
ANZ bank had the highest percentage of cases against it at 19.3 per cent or 925 cases but that was below its 30.3 per cent market share of total assets.
Westpac New Zealand had the second largest number at 15.2 per cent or 730 cases compared to its 18.2 per cent of total assets and Kiwibank had the third highest at 12.2 per cent or 583 cases compared to its 4.1 per cent of assets.
A Kiwibank spokeswoman said while it had smaller total assets in comparison to the big four it has a comparable customer base with over one million customers.
But it was Westpac that had the highest number of disputes - 65 out of 183 or 35 per cent were linked to the bank. ANZ had the next highest at 29 disputes.
A Westpac spokesman put its high number down to actively promoting the ombudsman service to its customers.
"The Banking Ombudsman can rule on disputes in an impartial and transparent way. We therefore actively promote the Ombudsman to our customers and encourage them to use this service.
"We know this may result in a heightened number of recorded disputes, but believe doing so can help provide the best outcome for our customers."
The spokesman said the bank was working to identify and address the underlying causes of complaints and the proportion of disputes related to Westpac had fallen in recent months since June 30.
"This is not captured in the reporting period in the Banking Ombudsman's report."
Sladden said there were a number of reasons why a bank could have a high number of disputes.
"It could reflect maturity in its own ability to handle complaints in house and it could be related to the fact they have promoted the use of the scheme."
Sladden said the Westpac disputes related to a variety of complaints coming through not any one particular issue.
"We have been working closely with Westpac to encourage them to manage problems more effectively."
Sladden said she was confident Westpac was taking the necessary steps to ensure complaints were being handled appropriately.
But she urged any Westpac customers who had concerns about the way their complaint had been handled to get in touch with the Banking Ombudsman scheme.
Sladden said all banks needed to do better in the way they handled complaints.
"I think the message coming out of the regulatory review is all banks need to continue to invest in the ways they identify and deal with customer complaints."
While the ombudsman service had not seen the same type of systemic abuse cases as arose in Australia Sladden said it knew it only saw the tip of the complaints iceberg.
"We have therefore begun developing a dashboard which will bring together complaints data from our cases and the banks. This is due to go live in mid 2020."
More vulnerable customer complaints
The ombudsman scheme also saw a rise in the number of complaints about banks dumping customers because of the conduct of the customer or because the customer could not satisfy requirements under anti-money laundering legislation such as provider an address or proof of where funds came from.
"While banks do have a right to terminate a relationship they need to do it in a fair way."
That involved giving a good level of notice and considering other ways the customer may be able to be kept on without breaching health and safety or AML legislation.
"Financial inclusion is a really important policy issue and we are trying to work with the government on this.
"We do feel concerned about people who can't have a bank account and therefore can't receive their income."
Sladden said in the United Kingdom it was a right to have a bank account but that was not the case here.
She did not know how many people were locked out of having a bank account in New Zealand but said often those people were some of the most vulnerable in society - those who did not have a permanent address and were already working with other social agencies.
The Banking Ombudsman Scheme also saw a big trend increase in complaints related to scams - up 118 per cent.
Cases relating to fraud involving theft of card data rose 78 per cent although actual numbers of complaints were low.
Complaints about family disagreements also rose 71 per cent and with those relating to power of attorney rising 136 per cent.
In one case a young woman who sufferer ed a stroke had difficulties convincing her bank to change who was in control of her finances.
Initially Sophie gave an enduring power of attorney to her grandfather Michael but when her health improved she wanted more control over her money and asked that her bank replace Michael with her partner Luke.
The bank said she had to sign a new operating authority first but her stroke meant she couldn't sign her name consistently and the bank refused.
The couple visited the bank several times over 18 months to try and get her grandfather replaced after he set up an automatic payment from Sophie's account to a third party.
Eventually the bank accepted Sophie's verbal request for the change after she provided an updated copy of the enduring power of attorney but she was unhappy at how long it had taken.
The ombudsman found the bank should have acted on her first request and the bank agreed to reimburse Sophie for the money her grandfather had transferred out and also paid her $7500 for stress and inconvenience.