All quiet on the complaints front

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Just over a month since new adviser regulations came into force, and FMA advertising aimed at increasing consumer awareness began, and disputes resolution schemes have yet to see an increase in complaints.

Wednesday, August 10th 2011, 7:25AM 4 Comments

by Benn Bathgate

None of the adviser dispute resolution schemes Good Returns spoke to - Financial Disputes Resolution (FDR), Financial Services Complaints Ltd (FSCL) and the Insurance & Savings Ombudsman (ISO) - reported any increase in consumer complaints since July 1.

"I think it hasn't got through to consumers entirely yet. I'm surprised too, I thought there might be more enquiry, but there isn't," said FDR chief executive Stuart Ayres.

Ayres' comments were echoed by FSCL general manager Trevor Slater.

"In fact we're getting very few complaints against individual brokers and advisers. Most of our complaints, we haven't had a great deal, have been against insurers," he said.

ISO Ombudsman Karen Stevens also reported a lack of complaint activity, saying the past month had been "a little bit quieter."

A number of reasons were cited for the low level of consumer complaints, including an improving economy and the fact that consumers may still be largely unaware of the DRS procedure.

"Although the FMA's campaign had quite a high profile I'd say it's been more high profile in the industry than with consumers," said Slater.

He also referred to his experience working at the Australian financial industry complaints service to argue that if the economy worsened, that might provoke more complaints against advisers.

"It started to jump when the investment market in particular started to go down, we have a steep increase then in complaints against those giving financial advice. It does have a flow on when people start losing money."

The effectiveness of advisers' own dispute handling was also cited.

Slater said the few complaints they have received have been referred back to the adviser and resolved.

"Most advisers are pretty good at doing things like saying sorry and explaining what happened. It's not a highly defensive attitude out there in the industry."

Ayres also agreed advisers were well equipped to handle disputes before they became full blown complaints.

"We're training [advisers] to handle stuff, and they may well be doing just that," he said.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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