A woman who discovered she had been added as a guarantor on her husband’s business loan without her knowledge or consent complained to Financial Services Complaints Ltd (FSCL) when the business defaulted and she was called on to repay it.
It was one of 1469 complaints received by the scheme in the year to June 30. That is up from 1426 the previous year but almost double the number of five years earlier.
In the case of the business loan, the lender offered to extinguish the woman’s guarantee and release their security for her half share of the family home.
FSCL chief executive Susan Taylor said it highlighted the importance of giving clear explanations and proper disclosure to everyone involved in a loan, including guarantors of business debt.
“Especially when small business are borrowing under stress.”
FSCL was one of the external dispute resolution providers that helped with complaints that cannot be resolved directly between the customer and financial service provider.
Taylor said complaints about lenders were the largest share, at 38%.
Of the 366 cases that were formally investigated, complaints about financial advisers – including mortgage and insurance brokers, as well as wealth advisers – made up the largest proportion at 23%, followed by complaints about lenders at 20%, and insurers at 17%.
Taylor said there had been a rise in complaints from small businesses, particularly about loans and insurance products.
She said the increase in complaints over the years was partly because people were more aware of their opportunity and right to complain.
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“But I think it’s also a reflection of the wider economic environment, we know that many New Zealanders and small businesses are struggling financially and when people are living with financial stress, they are more likely, I think, to complain.
“Also, I think there’s still a little bit of a hangover from Covid times in terms of the debt burdens some people are dealing with, particularly small businesses. And I also think there is a lot less tolerance now for when something goes wrong. Some years ago, people might have been prepared to chalk that up to a bad experience, but now they’re more likely to want to complain and to have their complaint heard.”
She said sometimes complaints would alert FSCL to a possible systemic problem that needed to be taken further and referred to a regulator.
Taylor said while financial providers’ processes had improved, there was still room for more.
Some people had to do a Google search or talk to a lawyer or friend before they knew they could take a complaint to FSCL, she said. Providers were meant to refer people to their third-party dispute provider when relevant.
Taylor said that complaining was difficult for some people.
“Often the people have got lots of other things that they’re struggling with in life. They’re juggling so many balls that making a complaint is just one thing too many and that’s difficult… which is where third-party support like financial mentors plays such a vital role.”
rnz.co.nz
