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Hardship Issues Keep Banking Ombudsman's Caseload High

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Fuseworks Media
Fuseworks Media

Banking Ombudsman Deborah Battell says that consumer hardship is keeping complaints to her office at record high numbers, and she expects little change given the effect of the Canterbury earthquake on Christchurch residents and the wider economy.

Today, as the Financial Service Providers (Registration and Dispute Resolution) Act 2008 comes into full effect, Ms Battell welcomes the new legislation that will give consumers of a wider range of financial services access to dispute resolution services.

"The Banking Ombudsman Scheme, which has been going since 1992, has led the way by protecting bank customers, and covers nearly everyone in New Zealand" says Ms Battell. In response to the new legislation, the Banking Ombudsman's services have been expanded to cover customers of most building societies, the two largest credit unions, some finance companies and a range of bank subsidiaries.

The fragile economy and consumer hardship are reflected in current complaints to the Banking Ombudsman. "Right now, we can see hardship underlying a raft of different complaints, including loan defaults, mortgagee sales, allegations of irresponsible lending, complaints about mortgage break fees and applications to withdraw money from KiwiSaver," says Ms Battell.

Following the Canterbury earthquake, a number of customers have been given repayment holidays on mortgages and other loans. Ms Battell said she is satisfied that banking service providers are working with their customers in response to hardship issues.

"But it's important that customers understand that interest still accrues while payments are on hold and gets added to their loan. Customers should approach their banking service providers about their financial position before they get into arrears. And if they do get into arrears, they need to talk to their providers so that they can try and stop getting further into debt.

"Customers also need to know that it may not be easy to withdraw money from KiwiSaver schemes. Ultimately each KiwiSaver scheme's trustee decides whether to accept an application to withdraw on the grounds of hardship, but many applications appear to have low prospects of success."

Ms Battell says the Banking Ombudsman Scheme has helped resolve more than 17,500 cases since its inception in 1992. "This long experience should give both customers and banking service providers considerable confidence that their disputes will be dealt with independently and fairly."

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