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Bank complaints rise

Complaints to banks about lending-related matters rose sharply in the last three months of 2021, according to new data.

Friday, April 1st 2022, 10:12AM 2 Comments

by Eric Frykberg

Banking Ombudsman data shows complaints about home loans and credit cards rose 24% and 19% respectively between October and December 2021 compared with the previous three months.

Complaints about long waiting times for a loan decision were up 62% on the previous quarter, while complaints about declined applications were up 22%.

In total, banks received 24,206 complaints during the quarter, up 3% on the previous quarter. Of these, 12% were about what customers considered to be banks’ failure to follow through on agreed action, and this was particularly so in lending-related matters.

Banking Ombudsman Nicola Sladden said she was not surprised by the increase because it coincided with the introduction of amendments to the Credit Contracts and Consumer Finance Act.

These require lenders, among other things, to scrutinise customers’ expenses more closely when assessing loan applications.

“We knew some customers wouldn’t be happy about this greater level of scrutiny - or the resulting longer processing times,” Sladden said.

“We issued a guide in October to help customers prepare for the changes, but many would still have been caught by surprise.”

Sladden said the tightening of loan-to-value ratios and an increase in interest rates during the quarter were also contributing factors to the spike in lending-related complaints.

Along with complaints about delays, people also complained more about bank charges.

Responding to this, the New Zealand Bankers’ Association said it was no coincidence that lending related complaints rose at the same time the government introduced new lending rules that made it harder to get a loan.

Its chief executive Roger Beaumont said the new rules meant it took longer to get a loan because banks needed to collect and verify more detailed information from customers.

“It’s also harder for banks to approve loans because of the surpluses customers need to have, on top of banks’ existing responsible lending practices such factoring in potential interest rates rises.

“We’re not surprised the government’s new rules are making some customers unhappy, and our front line workers bear the brunt of that. It’s also not surprising they’re complaining to the

Banking Ombudsman about it, even though we’re not responsible for the rule change,” Beaumont said.

He added more could be done to reduce the impact on most consumers while maintaining protections for vulnerable consumers.

“We’d like to see the new rules work in a way that doesn’t restrict access to responsible lending for consumers who can afford it, while ensuring vulnerable consumers are protected from high-cost credit that may not suit their circumstances.”

Tags: banking ombudsman complaints

« Another month of falling loans – CentrixNorthland Mortgage veteran considers quitting over 'compliance nightmare' »

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Comments from our readers

On 1 April 2022 at 12:32 pm Dirty Harry said:
For many of those complaints, running to the ombudsman is very much a case of punters barking up the wrong tree.

They should keep their unresolved complaints in mind next time they walk up to a ballot box.
On 6 April 2022 at 3:20 pm two cents said:
"Shock, Horror!" is so lame. You knew exactly what you were doing. Screwing consumers to make more profits.

"Vulnerable consumers" is a baseless smoke screen. Shame on you and the horse you rode in on.

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank - ▲5.65 5.79 ▲6.45
TSB Special ▲4.89 ▲4.85 4.99 ▲5.65
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
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Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.05 5.69 5.99

Last updated: 27 June 2022 8:43am

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