Complaints are growing but that is good news says FSCL

At the ten year anniversary of the dispute resolution scheme FSCL, CEO Susan Taylor, told Good Returns that the growing number of complaints is a good indicator of the robustness of the industry.

Taylor said that a 36% increase in complaints over the past financial year demonstrates the need for financial service dispute resolution.

While some of the complaints were Covid related Taylor says, “We were well up on complaints going into 2020 across all financial services. I think that this is just a key example of a growing awareness from consumers that they are aware that they can go to a dispute resolution scheme if they have an unresolved complaint.

“I also think that our scheme members are getting better at recognising complaints and referring people to us if they aren’t able to solve the matter themselves.”

Since its inception, FSCL has dealt with more than 30,000 complaints and enquiries about financial service providers, resolved more than 1,988 disputes and awarded over $6 million in compensation.

Total enquiries for the 2019/2020 financial year peaked at 3,422, or an average of 13 complaints a day.

“We hope the sharp increase over the past financial year reflects both our consumer outreach work and our scheme participants more readily referring clients who have unresolved complaints to FSCL,” said Taylor.

However, the organisation’s role is broader than just investigating and resolving complaints.

“The different functions come with being a more mature scheme. While our core function is to investigate and resolve complaints, an increasingly important element of our role is sharing lessons that we have learnt from complaints with our scheme members and also with consumers.”

This change from investigator to educator has seen the FSCL being asked to do more training, webinars and presentations over the years. A role that Taylor says “is all about raising standards in the financial services industry. But also about helping our scheme members strengthen their internal complaints process.

“With a backlog of successful caseloads we are now being seen as experts in the work we do. We are very happy to share that expertise with the wider community, because if we can prevent complaints arising in the first place that is good for everybody.”

The FSCL currently has over 7,000 participant members. Guided by the approval criteria of independence, fairness, efficiency, effectiveness, accessibility and accountability.

Following the impacts of Covid-19, Taylor says that FSCL expects to see more complaints as the various government financial relief packages end over Christmas.

However Taylor says that “an increase in complaints is not a threat. Rather, it is a fantastic opportunity to gain valuable customer insights, raise customer satisfaction, and focus on business improvement.”

Taylor said that in her over 25 years’ experience in dispute resolution, she had seen first-hand how beneficial alternative dispute resolution can be and the value that can be added to a business by effective complaints handling.

“Well-handled complaints reinforce public confidence in the financial systems we all rely on.”

Comments from our readers

On 29 December 2020 at 1:36 pm LNF said:

Perhaps this is part of the reason why a major PI insurer is withdrawing from the market. More people complaining and more people encouraged to complain. Unintended consequence
"Complaints are growing but that is good news" - perhaps NOT

On 2 January 2021 at 1:16 pm Amused said:

FSCL's annual report for 2020 published online and available for anyone to read shows us that there were only 25 physical cases/investigations made against financial advisers who were participants of the dispute resolution scheme. This is up slightly from the 15 cases/investigations which occurred in the previous year.

35% of all complaints that FSCL received were about insurers
29% of all complaints were against Lenders and finance companies
27% of all complaints were about Travel insurance

The next major dispute resolution scheme the Insurance & Financial Services Ombudsman (IFSO) for its 2020 annual report had 12 cases cases/investigations made against financial advisers who were participants of their scheme. The year prior there were only 3 cases made against financial advisers.

FSCL as noted above now have 7125 participants belonging to their scheme. IFSO publish greater detail in their annual report for 2020 which shows a total of 2,108 of its 4,716 members are actually financial advisers. Between both schemes FSCL and ISFO have 11,841 active participants so it can be said with some degree of certainty that the two schemes between them represent the majority of the financial services industry in New Zealand.

Based on the above stats a major PI insurer’s recent decision to exit the industry due to the supposed increased risk of claims against one or two man financial adviser businesses is looking more and more less plausible by the day.

Phil – perhaps you could present these stats to the PI insurer in question to see how they can still justify their earlier decision?

On 6 January 2021 at 3:00 pm Murray Weatherston said:

@amused
DRS is all about consumer complaint against adviser. These are in the absolute low, and as you point out, the number that aren't resolved and go to EDRS are even lower - for FSCL in 2020 there were only 298 for all participants - mostly manufacturer and only a few adviser.
But of those 298 cases 131 either didn't get to square one (jurisdiction declined) or were discontinued by the consumer.
The member came to a (conciliated) agreement in 135 cases.
Of the 42 remaining cases, 3 were decided 100% in favour of the consumer, 9 were decided partly in favour of the consumer, and 30 were decided in favour of the member.
So that IMO is not what is causing NZI to limit its PI coverage. Rather it is the fear of what the outcome of the new rules might be in the context of the adviser vs the regulator (not the consumer).
As a result of one discussion I have had with an undisclosed party, I now understand NZI are probably considering cover for regulatory offences is an extension to traditional PI rather than being an example of statutory liability. In my terminolgy, they are bundling all professional aspects - adviser vs client and adviser vs regulator - under PI.

Complaints are growing but that is good news says FSCL

Dispute resolution scheme Financial Services Complaints Limited (FSCL) says that the rise in complaints seen this year shows the robustness of the industry.

Tuesday, December 29th 2020, 6:00AM 3 Comments

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