Advisers taking lead on complaints processes

Insurance advisers seem to have better complaints processes in place than the big insurance companies, one external disputes resolution provider says.

Friday, February 8th 2019, 6:00AM

A lack of compliant internal complaints processes for insurance companies was highlighted by the recent Financial Markets Authority and Reserve Bank report into life insurers.

The regulators said most insurers' processes and systems for customer complaints, incident management and analysis of issues suffered from under-investment, and were poorly embedded and inconsistently used.

Not all complaints were captured and reported on. Most insurers had not given their staff clear definitions of what was a complaint and what was an “incident”.

“Insurers need appropriate systems and processes to record and resolve customer complaints and incidents. This includes defining what complaints and incidents are, and training staff on how to deal with these situations,” their report said.

“Insurers tended to believe that a low number of complaints indicated good conduct, but this had limited validity given their complaints management systems and processes were ineffective at identifying, recording, analysing complaints.”

Instead, insurers should be acting on complaints and performing root-cause analysis of the issues to prevent them recurring.

Trevor Slater, client director of Financial Dispute Resolution Service, said some insurers were even lacking things such as clear guidelines on their websites on how to make a complaint.

He said advisers would probably have to have their complaint processes audited when they went through licensing under the Financial Services Legislation Amendment Act. But insurers systems were lacking.

He said most businesses in New Zealand probably did not understand there was an official Australia/New Zealand complaint handling standard. In Australia, financial service providers are required by law to have a process that complies with it.

“We don’t have a complaint culture,” he said.

“It also leads to organisations not understanding the importance of complaint handling. There’s a lack of knowledge driven by a lack of understanding, driven by a lack of people making complaints.”

Advisers were doing a better job, he said. That could in part be due to FDR and FSCL hammering the point home to adviser members, he said. “The insurance companies need to seriously have a look at whether they have documented processes accessible to consumers.”

The regulators said there should be industry-wide agreement on what constituted a complaint.

At present, there is no common definition.

“This hinders the ability to form a consistent industry-wide view of the issues that cause complaints and how widespread these are. We would like to see the industry, perhaps through the FSC, achieve consistency in this area, raising customer awareness of complaint and dispute resolution processes, and encouraging the use of insights from complaints to improve customer outcomes.”

Tags: complaints Trevor Slater