Ministry needs to better understand disputes schemes: FSCL
If financial advisers think that disputes about their work are going to go away and the four external resolution schemes will disappear, then they are mistaken.
Tuesday, May 19th 2015, 7:13AM 
5 Comments
Financial Services Complaints chief executive Susan Taylor says many advisers maybe thinking, or hoping, that there won’t necessarily be a long road ahead for the schemes because consumers will be so happy with the services provided there won’t be any complaints nor any reason for disputes resoltion schemes’ continued existence.
“Unfortunately, much as I would like to, I don’t share that optimism, she said in a presentation at the FSCL conferene last week.
Since FSCL started nearly five years ago it has formally investigated more than 600 cases and has handled more than 7400 complaints and enquiries.
“These figures demonstrate a demand and need for our services.”
She says there will always be some complaints that cannot be resolved and that will need, or benefit, from an independent, expert third party helping to mediate or determine an outcome.
She also thinks the regulators and government agencies should recognise the good work the schemes do.
“I confess that I wonder if the Ministry has ever come to grips with the usefulness of dispute resolution.
“Our approach has always been that the blunt instrument of threats of fines or imprisonment is not the best way to improve service delivery in the financial services sector. Rather analysis by a body familiar with the issues – a body which can satisfy the consumer and assist the financial service provider - is a better solution.”
The Act governing the schemes will be part of the review of the Financial Advisers Act this year, and the question of whether there should be four schemes or fewer will come up.
Taylor says FSCL is doing a good job delivering its services.
“Our record of annual fee reductions for the past two years speaks of our efficiency.
“We consider ourselves to outperform all other schemes (in the key areas). We will continue to seek even further improvement in our services, and the way we deliver them.”
Dispute resolution schemes have an important role to play in markets, she said.
"We are not a regulator, so we genuinely want to work with financial service providers to improve services. Falling short of the standards required will have consequences, but we are only interested in compensation, not penalty.
"It is important that the industry shows the regulator and the legislature, that financial service providers and disputes resolution schemes have the capacity to maintain standards and consumer confidence without further state intervention and regulation."
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Comments from our readers
It is usually wise I find to have both sides of the story - quite often you find clients memory is different to the facts in a file - lets talk to each other instead of slagging off each others work to clients!
In both cases, I explained to the clients what was wrong and what it would take to fix it, in once case working with the existing policy.
The case that has been taken to the FMA was this:
1)I'd gone through a 3-month long advice /recommendation/implementation process, that replaced an inadequate policy that was significantly over-priced to boot.
In both cases, I explained to the clients what was wrong and what it would take to fix it, in once case working with the existing policy.
The case that has been taken to the FMA was this:
1)I'd gone through a 3-month long advice /recommendation/implementation process, that replaced an inadequate policy that was significantly over-priced to boot.
2) once the cancellation was notified to the adviser, he shows up (despite being told not to) and told 2 bald-faced lies - one, that the new policy was not yet in force and therefore the clients had had NO cover for several weeks, and that the new insurance company was unreliable and likely to fail.
3) as it turned out, he'd BOUGHT the policy in a book of business and had never serviced or even contacted these people.
4) He then advised then to re-instate the cancelled policy, but did not enter into (let alone complete) any form of engagement of scope of service, nor any information about their circumstances.
4)He also did not
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However, I have also been on the other side, having found TWO separate cases of egregious behaviour by other advisers, in both cases costing their clients substantial amounts of money (both in excess of $5,000).
However, in both cases, they are extremely reluctant to pursue a complaint because they have trepidation about becoming involved in a long and tortuous process of which they have little or no understanding.
So, ironically, those with some understanding of how they have been wronged (and the vexatious complainants) will come forward, while a large number of people, with legitimate grievance, never will.
In one of the cases, I took the complaint to the FMA (the adviser is an AFA and had made 4 identifiable breaches of the Code) but the FMA is unwilling to pursue it without a complaint from the affected party. Why can a 'whistle blower'not get any traction or action from the Institution charged with policing the FAA? Not even a 'please explain' letter?
It seems that the shonky ones will keep getting away with unacceptable behaviour and the FMA doesn't really give a toss.