Financial Complaint Numbers Show No Sign Of Easing, Says The Financial Ombudsman Service, FSCL
For the year ending 30 June, FSCL received 1,469 complaints, up from 1,426 in the previous year, and double the amount recorded five years ago.
"We're not yet seeing signs of complaints reducing since increasing rapidly two years ago in the wake of Covid-19," says Financial Ombudsman, Susan Taylor. "What's changed is the spread. Complaints are now more evenly distributed across a broader range of financial services, rather than being concentrated in just a few areas like non-bank lenders."
Lenders accounted for the largest share of complaints at 38%, but many of these were resolved before escalating to a dispute needing formal investigation. Dispute numbers rose by 4% overall, with a noticeable shift in the types of issues and sectors involved.
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%.
One emerging trend is a rise in complaints from small businesses, especially about loans and insurance products. "This likely reflects the tough trading environment many small business owners are facing," says Ms Taylor. "They're under pressure — and we're seeing that come through in the disputes they bring to us."
In a recent case, a woman discovered she had been added as a guarantor on her husband's business loan, without her knowledge or consent. The business later defaulted on the loan, and she faced the consequences of a guarantee she never agreed to give — including putting the family home at risk of a mortgagee sale.
In this case, the lender offered to put the matter right for the woman by agreeing to extinguish her guarantee and release their security from the woman's half share of the family home.
'The case highlights the importance of giving clear explanations and proper disclosure to all parties to a loan, including guarantors of business debt, especially when small businesses are borrowing under stress.
"Many of these issues could be prevented altogether with clearer and personal communication by the lender to the guarantor.
"We're here to help when things go wrong — but also to feed insights back into the system so things go better next time,' concludes Ms Taylor.
About FSCL – a Financial Ombudsman Service
FSCL's role is to resolve consumer complaints about financial service providers who are participants of the FSCL scheme. This includes non-bank lenders, credit unions, insurance companies, financial advisers, including mortgage brokers and insurance brokers, corporate trustees, fund managers, transactional service providers, and card issuers.
FSCL was established in 2010 following the approval of the then Minister of Consumer Affairs under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP Act). It is not-for-profit.
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