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Clients complain about advisers

Financial advisers who did not explain their terms of business, in particular their fees, who did not action client requests to change or cancel policies, and issues of disclosure were some of the most common causes of complaints about advisers over the past year, IFSO says.

Thursday, September 21st 2017, 12:10PM

The Insurance and Financial Services Ombudsman has released its latest report.

"Lessons from complaints can help the industry and consumers avoid the kinds of problems we see every day," Insurance and Financial Services Ombudsman Karen Stevens said.

The report showed 314 complaints were investigated and 3227 complaint inquiries received in 2016-2017.

Of the 3227 inquiries, 98 were about financial advisers, or about 3 per cent. 

Of the 314 complaints, nine related to financial advisers.

In one case, a client was diagnosed with cancer but his claim was declined because he had not disclosed his methamphetamine use. He argued that he was "pretty sure" he had told his broker.

In another, a client was worried a fund was not operating as it should. 

Another switched her cover on her broker's advice. But between the time when she signed the policy in September and it came into force in December, she had a viral ear infection and suffered vertigo. Her insurer declined it as non-disclosure. She said she should have been told it needed to be disclosed.

House insurance issues made up more than a quarter of the investigated complaints. Vehicle insurance was the most common source of inquiries.

Stevens said IFSO was likely to remain busy with the aftermath of recent disasters. 

“Since 2010, we have resolved 198 Canterbury-earthquake complaints and responded to 2,060 complaint inquiries,” she said.

“We continue to be involved with more complex Canterbury complaints, and we have signed a Memorandum of Understanding with EQC so we will be dealing with the Kaikoura earthquake complaints.”

The need to improve consumer understanding and financial literacy was a consistent theme.

“Over the 22 years we have been resolving complaints, we’ve heard from thousands of consumers who simply did not know what they were signing up to,” she said.

“Many complaints could have been avoided if, for example, people read and understood their insurance policies or their loan or credit contracts.

“Our advice to consumers is get hold of the documents, read them, and ask questions until they fully understand. Consumers need to know about their rights and responsibilities, so they can make more informed choices."

Tags: Disclosure fees financial advisers IFSO Insurance Advisers

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