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2021 Media releases

6 September 2021: Complaints about banks up, but dispute numbers down

Complaints about banks were up 6 per cent on the previous financial year, although dispute numbers were down 3 per cent, according to the Banking Ombudsman Scheme’s latest annual report.

Banking Ombudsman Nicola Sladden said she attributed the rise in complaints to a greater willingness by customers to seek help when they had problems with their bank.

“We encourage customers to speak up, ask questions and make complaints. It’s inevitable that things will sometimes go wrong. What matters is how problems are put right.”

Ms Sladden credited the scheme’s early resolution service for the drop in disputes, saying it resolved 96 per cent of complaints without escalation.

“The key is to nip problems in the bud early. When people have problems, they need to be heard and responded to as quickly as possible.

“Our new fast-track process for resolving complaints by customers in financial difficulty proves this point, and we’ve seen cases where banks have responded with exemplary promptness and support.”

In total, 3,149 people made complaints to the scheme during 2020-21, while a further 1,524 made enquiries and 140 escalated their complaints to disputes.

Ms Sladden said unclear or inadequate communication was at the root of many of the complaints.

The most common complaints were about bank accounts and lending (home loans, credit cards, overdrafts, personal and business loans). This was followed by payment methods (such as internet banking and overseas transfers), bank cards and investments.

She said the closure of branches and ending of cheques had also resulted in complaints.

“COVID-19 has accelerated the already rapid change to digital, contactless banking. Although banks have provided help for this transition, there’s no doubt some people have felt left behind.

“We continue to receive a steady stream of complaints from people who had lost money in scams or through fraud. Scams, including telco, romance and investment scams, can affect anyone and can be truly devastating. We urge people to be extra careful online, and to contact their bank immediately if they think they’ve been scammed.

“In general, we consider whether banks have treated customers fairly, communicated clearly and acted with reasonable care.”

The report features cases where banks fell short in these areas. These include giving an inadequate response to a hardship request, offering unaffordable credit increases, and ignoring a problem gambler’s request not to be given personal credit.

Ms Sladden said the scheme’s work also had a prevention focus, which included analysing complaints and sharing the resulting insights.

Two milestones during the year were the establishment of a dashboard to track complaints about banks and a whistleblowing service to help to improve conduct in the sector. The dashboard revealed banks reported more than 100,000 complaints during the financial year.

See the annual report here.

30 June 2021: Over 700 credit card complaints received this year, says Banking Ombudsman

The Banking Ombudsman Scheme has received over 700 credit card complaints this year (from 1 July 2020).

“Banks reported nearly 8,000 customer complaints about credit cards from January to December last year,” says Banking Ombudsman Nicola Sladden. “Many of those complaints were resolved quickly, with less than 10 percent referred to our free and independent service to investigate.”

Two recent Banking Ombudsman investigations highlight the need to speak up if you need extra help, or if you are in a vulnerable situation. “Banks are required to communicate clearly and effectively, to treat customers fairly, and to provide extra support to those who need it,” says Ms Sladden. “While banks are working hard to improve customer care, particularly for those experiencing vulnerabilities, some customers can fall through the cracks.”

For example, Ellen*, who was on ACC and earned $27K per annum, was given an unaffordable credit card limit increase of $24K by her bank. Ellen had to use a third of her total income to meet the minimum monthly repayments.

“Too much credit card debt can lead to financial stress and hardship. Banks are required to check whether credit limit increases are affordable for customers, and in this case, it did not make the right enquiries. We found the bank was in breach of its responsible lending obligations.” The bank reimbursed Ellen $9,000 in fees, interest and credit card insurance, $1,000 for failing to provide statements, and $2,000 compensation for inconvenience.

In another case, Mason*, who had a gambling problem, was issued with a credit card shortly after he asked his bank to block him from any future personal loans. “In this case we found the bank breached the Code of Banking Practice by not communicating effectively,” says Ms Sladden. Mason wrote to his bank and asked if they could block his access to personal loan services due to personal circumstances. The bank responded to say his request had been noted and the home lending team notified. Three months later, Mason applied online for a credit card with a $12,500 limit, which the bank immediately approved. “There was a clear disconnect at the bank, the left hand wasn’t talking to the right. Mason should have been asked about his personal lending block when he applied for a credit card.” The bank reimbursed Mason $1,000 credit card interest and paid $500 compensation.
Ms Sladden says a gambling addiction would fit under at least one of the consumer vulnerability drivers in the recently released framework by the Council of Financial Regulators. The framework acknowledges anyone at any time can be affected by vulnerability, making them more susceptible to financial harm.

Banks are now introducing measures to help prevent the financial harm caused by gambling. Some are working with anti-gambling support groups, some have introduced opt-in credit card gambling blocks, and some are banning the use of its credit cards for gambling.

“We welcome the introduction of new responsible lending rules later this year and hope to see fewer customers falling through the cracks.”

3 March 2021: Banks share complaint data and launch staff whistleblowing service

Banks are sharing their complaint data and encouraging staff to raise concerns through an independent whistleblowing service.

Minister of Commerce and Consumer Affairs David Clark says “New Zealanders rightly expect banks to operate with high integrity, and to treat their customers and staff fairly. I’m pleased to launch the Banking Ombudsman Scheme’s complaints dashboard and independent whistleblowing service. These initiatives will help achieve higher standards of conduct, culture and customer care across financial services in New Zealand.”

From today, individual bank complaint data will be added to the industry-wide dashboard, run by the Banking Ombudsman Scheme. The new data provides a snapshot of the number of complaints each bank receives, market share, the time complaints take to resolve, and the proportion resolved.

“Owning, fronting, and learning from complaints leads to better outcomes for customers," says Banking Ombudsman, Nicola Sladden. "Sharing complaint data is a big step toward greater transparency and accountability.”

The dashboard shows over 27,000 complaints were received by all banks from 1 October - 31 December 2020, an increase from the previous quarter. It provides a breakdown of the issues, products and services customers complain about, such as home loans, credit cards, internet banking or investments. “Banks can identify a wealth of insights into what’s going wrong, so they can make improvements.”

Ms Sladden says the purpose of the new individual bank table is not to compare raw numbers. “Direct comparisons might not give an accurate indication of service levels because banks vary in size, ability to capture complaints, and they offer different products to the public.”

“It is inevitable that things go wrong sometimes. What matters is how problems are put right. Banks deal with hundreds of thousands of customers and process millions of transactions every day. We strongly encourage banks to capture all complaints, so they have every opportunity to improve their products and services for customers,” says Ms Sladden. “High complaint numbers could signal a strong commitment to capturing and learning from complaints, no matter how small.”

“The real value is in the trends, issues, and insights, which will develop over time. Banks are working with us on improving the collection and the consistency of this individual bank data.”

The whistleblowing service provides bank employees with a safe and independent channel for reporting wrongdoing at work.

“There is a strong connection between the environment banks create for staff and the resulting outcomes for customers,” says Ms Sladden. “Bank staff can now raise their concerns about behaviour or practices at their bank through this independent service, which will be run as a separate arm of the Banking Ombudsman Scheme. Bank staff can speak up anonymously, and their concerns will be managed and reported back to banks for investigation. The new service will supplement banks’ existing whistleblowing channels.”

Ms Sladden says banks have actively supported the dashboard and whistleblowing service, and both sector-wide projects have the backing of the New Zealand Bankers’ Association (NZBA), the Financial Markets Authority (FMA) and the Reserve Bank (RBNZ).

“It’s exciting to be delivering on findings from the Bank Conduct and Culture Review and responding to the need to improve trust and confidence in banking.”

The updated complaints dashboard can be found here from 3 March, 3pm.