1. Making a complaint
The complaint must be made to the scheme member first*.
They have up to a maximum of three months in which to investigate and provide a Decision or Deadlock notice. If you are unhappy with that decision the complaint can then be referred to FDR within the following timeframes:
- within three months after receiving a decision OR deadlock notice
- within two years after first making that complaint to the member in any other case.
* within six years from the date of the event about which the complaint refers.
Consumer research shows that following these steps can help get problems sorted out more quickly:
- Try first to contact the person you originally dealt with. If they can’t help, say you want to take matters further. Ask for details of the official complaints procedure and the name of the person who will be handling your complaint.
- It can be best to put your complaint in writing. If this isn't something you feel comfortable doing, you could ask a friend, carer, family member or an organisation like Citizens Advice Bureau to help you. Or you can make your complaint by phone – but make sure you ask for the name of the person you speak to and their job title. Keep a note of this, with the date and time of your call – and what was said. You may need to refer to this later.
- Try to stay calm and polite, however angry or upset you are. This will help you to explain your complaint as clearly and effectively as possible.
- If you are putting things in writing, write "complaint" at the top of your letter. And make sure you include important details like your customer number or your policy or account number.
- Keep things brief and to the point. Set out the facts clearly and in a logical order. Say why you're not happy and what you want the financial service provider to do about it. This will make it easier for them to look into the problem and sort things out.
- Send copies of any relevant paperwork that you believe backs up your case. Keep a copy of any letters between you and the business. You may need to refer to them later.
- Don't always expect immediate results – some complaints may take time to investigate properly and resolve. FDR scheme members have up to three months to sort out the complaint itself, before FDR can get involved formally.
If you're not sure who to complain to at the business involved, get in thouch with us. We will contact the right person there for you, telling them that you have a complaint they need to look into.
You can contact either FDR direct 0508 337 337, or your financial service provider.
If you contact FDR and you have not received a decision or deadlock letter from your financial service provider, we will take your contact details, a brief over view of your complaint, your financial service provider details, and refer you back to your financial service provider. We will follow up with you in 3 months to see if you are happy with the outcome of making your complaint to your provider, or provide assistance if necessary, or you can contact us again at any time if you have difficulty in making your complain to your financial service provider.
Your complaint must first be considered by your financial service provider through their internal complain process which they are required to have. If they have not made a decision to your liking or issued a deadlock notice within 3 months of you first making your complaint, you can contact FDR and we will consider you complaint under the FDR dispute resolution process.
You can make a complaint to FDR about a financial service provider who has been de registered by the Financial Service Providers registrar (see www.fspr.govt..nz , or has been terminated by FDR (see Scheme Member search at www.fdr.org.nz) so long as the issue that gave rise to the complaint occurred after 1 October 2010 and whilst the financial service provider (or scheme member) was a member of FDR.
Only if you are not seeking redress against the financial adviser or QFE.
If you are seeking redress or compensation by way of dispute resolution you need to follow the directions at How to Make a Complaint.
The FMA is the regulator for financial advisers and QFEs (Qualifying Financial Entities). It acts as the disciplinarian and investigates complaints about financial advisers.
If you are not wanting compensation but have a complaint about your financial service provider, you can complain to FMA by calling 0800 434 566 (+64 3 962 2698 for overseas callers), or going to www.fma.govt.nz
What you can complain to FMA about
You can complain if a person or company providing you with financial advice breaches the Financial Advisers Act 2008 by, for example:
- failing to exercise care, diligence and skill when providing financial services
- claiming to be a financial adviser or providing financial services when they are not allowed to do so
- failing to comply with disclosure or conduct obligations
- behaving misleadingly or deceptively.
You can also complain if an Authorised Financial Adviser fails to follow the Code of Professional Conduct for Authorised Financial Advisers. For example if they:
- imply they are independent when they are not
- fail to put client's interests first
- fail to act with integrity.
Wholesale clients are not covered under the FSP Act.
From the legislation:
"The following persons who receive a financial service are wholesale clients in respect of that financial service:
(a) a person who is in the business of providing any financial service and receives the financial service in the course of that business:
(b) a person whose principal business is the investment of money or who, in the course of and for the purposes of the person's business, habitually invests money:
(c) an entity to which at least 1 of the following applied at the end of each of the last 2 completed accounting periods:
(i) at the balance date, the net assets of the entity exceeded $1 million:
(ii) the turnover of the entity for the accounting period exceeded $1 million:
- (i) at the balance date, the net assets of the entity exceeded $1 million:
(d) a related body corporate (within the meaning of section 5B(2) of the Securities Markets Act 1988) of an entity to which paragraph (c) applies:
(e) a local authority, a Crown entity, a State enterprise, the Reserve Bank of New Zealand, and the National Provident Fund (and a company appointed under clause 3(1)(b) of Schedule 4 of the National Provident Fund Restructuring Act 1990):
(f) a person who falls within 1 or more of the categories listed in section 3(2), 5(2CB), or 5(2CBA) of the Securities Act 1978 if the service relates to securities that may be offered to that person, or that have been subscribed for by that person, in a private offer of securities:
(g) an eligible investor under section 49A:
- (h) if the financial service is a financial adviser service or a broking service, a person who is a wholesale client in respect of that service under the Financial Advisers Act 2008."
Every financial service provider must be a member of either an approved dispute resolution scheme or the Reserve Scheme (FDR), in respect of a financial service provided to a retail client.
- a retail client is any person who receives a financial service who is not a wholesale client. See the FAQ 'Who are wholesale clients?'.
Retails clients only (not wholesale) -see definitions of "Who are Wholesale Clients"; "Who are Retails Clients"
Any individual, or organisation with fewer than 20 employees (or the equivalent of 20 full-time employees), can make a complaint about an FDR scheme member who provides a "retail" service. Larger organisations may still be able to bring a complaint to FDR. It may be considered, at FDR’s discretion.
Complaints can be made about the services, advice, or products that have been received from a financial service provider or adviser. You can also complain about the conduct of a financial service provider or adviser, or their actions if you believe they have breached an industry code of conduct or other legal obligation.
The FDR scheme also has the discretion to consider any complaint about a scheme member, if all of the parties involved agree to it.
Anyone can complain on a consumer’s behalf - for example, a member of the family, a friend or a person from a Community Law Centre. FDR requires written authority from the consumer before discussing any personal details with a representative, or requesting any information that may be needed from the financial service provider.
The cost of taking action are not covered by FDR. This includes legal fees and any other costs associated with using FDR to resolve a dispute.
FDR can consider compensation for any losses that may have been suffered, but cannot award punitive costs, penalties or interest, in the final determination about a dispute. The maximum amount of money that can be paid out is $200,000 in total.
No. The FDR scheme is a free and informal alternative to going to court, so a complaint does not need to involve a lawyer.
A consumer may use a lawyer if they wish, and have the lawyer or any other person represent them. However if a consumer does want to bring an adviser or lawyer to an FDR meeting, all parties to the dispute must agree before this can happen.
The dispute process is free for complainants.
FDR is committed to resolving complaints promptly and responding to customers as soon as possible. FDR encourages early resolution in the interests of all parties that might be involved.
Most disputes will be resolved within two months. A small number may take longer, depending on how complex the complaint is and the type of information that may be required. Scheme Members must respond within specific timeframes, according to the FDR process.
The maximum time it can take for a dispute to be resolved is about seven months.
2. Complaint types
There are some areas and actions that FDR does not cover:
- The performance of financial investments.
- A scheme member’s fees, unless there is a dispute about how they have been applied.
- The scheme member’s general policies and practices, although a complaint can be made about how these policies were applied or administered.
- The maximum compensation than can be awarded is $200,000. Complaints can be brought to FDR that involve more than $200,000, but maximum compensation limit still applies.
- FDR cannot consider a complaint that has been made in another forum; a complaint that has already been considered by FDR; if a complaint where a reasonable settlement offer has already been made, or if FDR decides the complaint is frivolous or vexatious.
FDR cannot consider disputes about fees and fee levels generally. If a consumer believes a financial service provider has applied an incorrect interest rate – in error or in breach of a contract – FDR may consider the complaint.
No. FDR rules do not apply to a scheme member’s judgement in relation to lending or security. FDR cannot make a scheme member provide services or advice. However, if you think you have been given the wrong advice about a loan, FDR may be able to help you.
Any complaint made to FDR must be about an issue or action that took place after 1 October, 2010, or from the date that a financial service provider joined FDR..
There is also a time limit about the amount of time between a consumer receiving a deadlock notice, and making a complaint to FDR.
A consumer must bring a complaint to FDR within three months of getting either a decision notice or deadlock notice from their financial service provider.
The complaint must be made to FDR within two years from when the complaint was first raised with the financial service provider.
A complaint is not covered by FDR if it involves events that occurred more than 6 years before the complainant made the complaint to the member
Yes. This form is available to make a complaint about FDR. FDR is governed by an Advisory Body, and is bound by law to pass on all complaints about its service and conduct to the Advisory Body. The Advisory Body reviews all complaints, and will make contact with the consumer directly after receiving the complaint.
FDR can consider disputes about a person’s credit rating. It can investigate whether the information is correct, and if the financial services provider who provided the information complied with the relevant laws.
3. The FDR process
Deadlock is a term used in the complaint process. Deadlock means either:
- a consumer has come to the end of the financial service rpovider's complaint process and their complaint has not been resolved, or
- it has been more than three months since the consumer first contacted the financial service provider and the consumer does not have a resolution they are happy with.
A professional dispute resolution service involves assessing all of the available information around a dispute. This includes taking into account any evidence given by all parties, and any evidence that backs up verbal statements. It can also make enquiries and ask for more information from the parties in the dispute.
FDR will also ask for any documentary evidence that supports a party's claim, so keeping notes about phone calls, and copies of correspondence is a good idea.
No. An outcome from a dispute may include some monetary compensation, but can also be other things, such as an apology or that a member changes a business practice
Not usually. Most complaints can be dealt with by letters and/or discussions via telephone. Meetings between all parties can be arranged if required.
Yes. Only the people and organisations involved in a dispute can access any information related to the complaint. Information will not be shown to any other party without consent.
No, a consumer does not have to accept any decision FDR makes. The complaint can be taken to court, the Disputes Tribunal, or any other complaint resolution body. FDR cannot however look into a complaint that is currently being considered by a court.
A complaint does not need to be made to FDR before being taken to the courts. However a dispute that has been taken to court or is in the process of being considered by the courts cannot then be brought to FDR.
If the consumer disagrees with the final outcome from the FDR process the dispute can still be taken to the courts.
The FDR scheme is funded by its members and by fees that the Government charges to all financial service providers. The more difficult a dispute is to resolve the more it will cost the Scheme Member, so there is an incentive to resolve disputes quickly and efficiently.
FDR cannot give legal advice because it must remain independent of all parties.
4. FAQs for scheme members
The FDR scheme is free for consumers to use. FDR scheme members pay an annual membership fee and per-complaint costs. See the Fees and Costs page.
This is intended to encourage scheme members to try and resolve disputes within their own dispute handling process. However, bringing a complaint directly to FDR is available if it is required. All parties to the dispute must agree to coming directly to FDR before this can happen.
The Government sets the fees for FDR.
Yes. The membership fee is an annual charge, paid six-monthly in advance.
No, FDR only charges annual membership fees and (where necessary) cost-per-complaint fees.
FDR handles complaints from consumers. Because it is the consumer who has raised the complaint, it must be the consumer that is satisfied by the outcome. However, FDR’s processes and very experienced staff ensure that outcomes are fair and reasonable for all parties involved in the dispute.
Yes. FDR requires three months written notice of a scheme member's intention to leave the scheme.
The company behind FDR, Dispute Resolution Services Limited, has been in the dispute resolution business for over 10 years. The experience of the DRSL and FDR teams will be applied to all complaints and vexatious and/or frivolous complaints will be identified at the beginning of the FDR dispute resolution process. The FDR complaint criteria are very well defined and any complaints that do not fall within FDR’s jurisdiction will also not be progressed.
Each financial service provider will have its own definition of deadlock. The simplest definition is that a scheme member has received a complaint, has made all reasonable attempts to resolve the situation, but the consumer is not satisfied with the outcome.
Please also note FDR will consider a complaint to be at deadlock if the consumer has not had any contact from their financial service provider in response to their complaint, or if a complaint is not resolved within three months of it first being made.
FDR is able to ask for any information it requires in order to resolve disputes, unless:
- it would be a breach of confidence
- the information is subject to legal professional privilege or
- the party does not have the information.
Yes. The information provided to FDR will only be used in your dispute. It may be shared with the other parties in the dispute, but not with anyone else.
However, FDR is able to make its final recommendation public, and also has the authority to direct a scheme member to make a public apology as a remedy to a complaint that is upheld.
Effective alternative dispute resolution (ADR) takes into consideration the impact on and evidence from ALL parties. The FDR process is based on DRSL’s years of experience doing exactly this.
FDR will not consider a complaint if:
- The complaint has been made to a court or the Dispute Tribunal, or is currently being considered as part formal court process.
- The complaint involves the same, or substantially the same, issues as a complaint that has been previously made to FDR (unless there is new information).
- A reasonable settlement offer has already been offered to the consumer by the scheme member.
- The complaint is considered by FDR to be frivolous or vexatious.
- The event being complained about occurred prior to a scheme member’s date of joining the FDR.
- Complaints about general commercial decisions of a scheme member, such as an interest rate or a credit decision.
Yes. Please use this form to make a complaint about FDR. FDR is governed by an Advisory Body, and is bound by law to pass on all complaints about its service and conduct to the Advisory Body. The Advisory Body will review any complaints and contact the consumer directly.
These amounts should be based on a scheme member's accounts for the last financial year.
No. FDR is supplied by the Government as a reserve dispute resolution scheme for the financial industry.
Over the last 40 years there has been a considerable amount of research conducted into customer complaints and their management. The work has been undertaken around the globe by different authorities. The facts reported below have been assembled from a variety of sources, and are the products of well-conducted research. Sources are fully acknowledged.
- The main driver of high levels of customer retention is a well-documented complaints management process (Ang and Buttle 2006).
- 79% of organisations claim to have a documented complaints management process (Ang and Buttle 2006).
- 74% of organisations having a documented complaints-management process believe it is effective (Ang and Buttle 2006).
- Up to two-thirds of dissatisfied customers do not complain (Richins, 1983; Clark 1997).
- Customer are much more likely to complain if the product or service is expensive or important (Goodman 1999).
- In the case of banks, most customers are dissatisfied, but only 11% complain (Press, Ganey and Hall 1997).
- On average twice as many people are told about a bad experience than they are about a good experience (Goodman 1999).
- Only 20% to 35% of dissatisfied customers tell their service providers about their most dissatisfying experience (Day and Landon 1976).
- Customers who think they have a poor chance of being successful in lodging a complaint are more likely to exit the relationship (Singh 1990).
- When customers are satisfied with the way their complaint is handled, repeat purchase intention rises to 70%, repeat purchase intnetion is only 30% if the customer is dissatisfied with the way the complaint is handled (TARP 1986).
- Customers who have cause for complaint and have their complaint dealt with well by an organisation are 9 times more likely to re-buy than customers who have the same problem but do not complain to the organisation (TARP 1986).
- Most complaints want an apology and an assurance that the same mistake will not happen again. 70% of incidents that progress to a lawsuit would not have done so had an early apology been forthcoming (Health Service Journal 1991).
- Customers are much less likely to complain if they believe the complaints-handling process is difficult or costly to engage (Richins 1983).
- Failure or delays in responding to email complaints only add to a complainant's sense of dissatisfaction (Moore and Moore 2004).
- Effective complaint handling can have a dramatic effect on customer retention rates, deflecting negative word-of-mouth and improving bottom-line performance (Fornell and Wernerfelt 1987).
- Fast complaint resolution results in higher levels of customer loyalty than slow complaint resolution (TARP 1986).
- Customers whose complaint is resolved at the first point of contact are 10% more satisfied and loyal than customers whose complaint is resolved over multiple contacts (Goodman 1999).
- Complainants who attach a high degree of importance to a product or service and have cause for complaint are more likely to engage in negative word-of-mouth behavious (Blodgett, Granbois and Walters 1993).
- As complaints are escalated though an organisation the cost of resolving them multiplies. It is up to 500 times more expensive to have a complaint dealt with by an external review than to resolve it at the first point of contact. (Citizens' Charter Complaints Task Force 1995).
- Once a customer begins to seek redness, negative word-of-mouth is dependent on the level of justice they believe they receive in the complaint-handling process (Blodgett, Granbois Walters 1993).
- Asian customers are much less likely to complain to an organisation than Westerners. However, they are much more likely to report their dissatisfaction to friends and family (Liu and McClure 2001).
- The average customer with a problem will tell between 8 and 10 people about it (TARP 1986).
- Customers who complain are looking for justice (Blodgett, Granbois and Walters 1993).
- Customers who complain about service failure and are well recovered by their service providers are often more satisfied than they were before the service failure occured (Smith and Bolton 1998).
- The return on investment from handling complaints can exceed 100% (TARP 1986).
- About half the customers who complain are dissatisfied witht he way their complaint is handled (Grainer 2003).
- Customer loyalty after a complaint event essentially depends on satisfaction (Homburg and Furst 2005).
References for Factoids
Ang, L. and Buttle, F. (2006). Customer retention management processes: a quantitative study.
European Journal of Marketing, Vol. 40 (112), 83-99.
Listening Post www.listeningpost.com.au
1. The terms and conditions of many financial service agreements allow financial service providers to recover legal costs and other losses from their customers.
2. Financial service providers may enforce the terms of agreements with their customers. This would also cover costs, as long as those costs are not associated with making a complaint to the reserve scheme.
No. Under the FDR scheme rules and legislation scheme members cannot claim back legal fees or any other losses incurred as a result of their customers making complaints through the reserve scheme, nor can they pass any of these costs on to the customer. One of the core features of the dispute resolution schemes is that their services are provided free of charge to consumers.
The provisions in the legislation that require the reserve scheme dispute resolution process to be free of charge to consumers are Rules 4, 8, 14 and 44 of the Financial Service Providers (Dispute Resolution—Reserve Scheme) Rules 2010. Scheme member fees and complaint charges are set out in the Financial Service Providers (Dispute Resolution—Reserve Scheme Fees) Rules 2010.
There are two separate processes to register as a financial service provider (FSP).
- Become a member of a dispute resolution scheme, e.g. FDR. There is an annual membership fee, invoiced six monthly, payable to the Ministry of Economic Development.
- Register at the Companies Office Financial Service Providers Register (FSPR) at www.fspr.org.nz. You will be asked to give/obtain an iGovt login. Follow the online process and when you are asked which dispute resolution scheme you belong to, choose FDR. You pay a separate fee to Companies Office - a one-off joining fee and then a lesser annual fee.
Complete an application membership form for Individual if you are a sole operator. *Note; please include your company, trust and trading names, if applicable .
Complete an application membership form for an Organisation if you have Adviser(s)/Broker(s) employed or contracted to you. *Note; please complete a Schedule of Advisers employed or contracted to you, and include your own name as one of those Advisers.The other Advisers in turn may need to note in the schedule if they are operating as a company or trust.
If two Advisers operate through the same company, complete one Organisation application form and a Schedule listing the two Advisers/Shareholders/Directors