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Advice processes prompt complaints

Complaints about financial advisers to the Insurance and Savings Ombudsman scheme primarily relate to fees and advice processes, its latest annual report shows.

Tuesday, September 29th 2015, 6:00AM

The ISO scheme has released its annual report for the 2014/2015 financial year.

It fielded 3057 complaints inquiries. Of the 254 complaints accepted for investigation, just five related to financial advisers.

They included one about financial advice, two about fees, one about an adviser’s responsibility for client liability under a build contract and another about the sales process for life policies.

In one case, a client queried being charged a fee by an adviser who arranged a loan the client did not end up taking out.

The client was asked to pay a fee of $1540 to the adviser for arranging the loan.

The client paid $500 but then complained that he did not think he was required to pay because he did not ask the broker for a loan approval – he thought he made an informal inquiry to see what interest rate the adviser would be able to obtain for him, in order to compare it with the loan he had already arranged.

The ISO did not uphold the complaint.

In another case, a client was sold insurance policies by someone going door-to-door in 2012.

Two years later, the client contacted the insurance company and asked to withdraw money from a savings plan he believed had been arranged.

The insurance company told him he did not have a savings plan, only six life insurance policies.

The client asked to cancel the policies and for the insurer to refund the premiums he had paid. The insurer cancelled the policies, but declined to refund the premiums.

The ISO said the client had been told to nominate four members of his family and sign insurance applications using their names.

“There was no documentary evidence that [the salesperson] told [the client] he was arranging a savings plan. However, the Case Manager had concerns about the possibility that he told him to sign another person’s name on an application. The Case Manager discussed this with [the insurer] and the insurer offered to settle the complaint by paying an ex-gratia sum equivalent to 75% of the premiums he had paid for the policies.”

The ISO Scheme currently has 4326 Participants, which provide financial services throughout New Zealand.

Just 1% of its complaints were upheld.

Two-thirds of complainants who went through the process said they received enough information from their financial services provider about the internal complaints process and the ISO scheme.

The ISO made a net profit of $94,177 in the year.

The average time to close the 254 complaints was 88.89 days (down from 91.28 last year), from the date the ISO received the file from the financial service provider through to closure.

Tags: ISO

« Performance fee structures shortchanging investorsLVR restrictions to be reviewed »

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