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Amanda Morrall talks to FSCL CEO Susan Taylor about how to lodge a complaint about your financial services provider

Posted in Personal Finance
See video

By Amanda Morrall

Investors who were steered into Ross Asset Management (RAM) via a financial advisor are being encouraged to come forward and lodge a complaint with their affiliated dispute resolution scheme.

In an interview with interest.co.nz, Financial Services Complaints Ltd (FSCL) CEO Susan Taylor restated the call for RAM investors who were directed into the failed fund (now under investigation by both the Financial Markets Authority and Serious Fraud Office) to take action, adding that others with unresolved complaints should do the same.

The exact number of investors who came into Ross Asset Management through a financial advisor is not known. Although receivers PwC are still combing through the books, RAM's 900 clients with a supposed NZ$450 in assets were shocked to find only NZ$11 million in actual funds by the time authorities stepped to explore identified irregularities. (See Gareth Vaughan's interview with FMA's Sean Hughes here for more.)

Taylor said most investors appeared to have invested through word of mouth, either a recommendation from a friend or a family member.

"Anecdotally we heard from statements coming from the (RAM) support group that a few investors might have invested on the advice of an advisor. If that's the case, I would strongly recommend they find out which scheme that advisor belongs to and look at making a complaint to that scheme. We encourage people to come forward. It's important that the bad eggs be weeded out."

FSCL was the nominated dispute resolution scheme for RAM although financial advisors themselves have a choice between four dispute resolution schemes to be compliant with new financial laws in New Zealand:.

Financial Services Complaints Limited

Insurance & Savings Ombudsman

Financial Dispute Resolution Scheme (FDR)

Banking Ombudsman

Check here to see if your provider is a member of the  FSCL or look up the dispute resolution scheme of your advisor on the Financial Services Provider  Registry here.

'Cluster of complaints'

Taylor said in the weeks leading up to revelations that RAM was being investigated by the Serious Fraud Office, a "cluster of complaints" had come to the FSCL's attention.

Taylor said her team never had a chance to look into those complaints because the sheer volume of them led the FSCL to alert the Financial Markets Authority instead, which, it turns out had also been fielding complaints.

"When they heard we were receiving a large number of complaints they swung into action right away,'' she said.

Taylor said some investors had been trying for nine months unsuccessfully to gain access to their funds and were finding it increasingly difficult to reach RAM's chief executive authorised financial advisor David Ross. Taylor speculated that if investors had acted in the early stages, financial losses might have been reduced and other investors spared.

Contrary to public perception, Taylor said it was a relatively straight forward procedure making a complaint.

"It's free to the consumer, there is no filing fee, they don't need a lawyer. We try to make the process as friendly as possible for the consumer,'' said Taylor.

"We will tell them about our process and help them along the way. I don't think they need to worry that they'll be cross examined and such. The other thing to remember is the process is confidential. We don't name parties. So the person doesn't need to worry that the case will get splashed across the media."

In the first instance anyone with a complaint, be it an advisor, an insurer, or another financial service sector party, is required to lodge a complaint directly to the party in question. If they can't come to terms, then they can take the complaint to the dispute resolution scheme which will review the relevant files, talk to the parties involved and potentially refer it back for resolution. Failing a negotiated settlement, the dispute resolution scheme will adjudicate the case on merit, either dismissing it or potentially ordering compensation, which can include an award of up to NZ$200,000.

Decisions not binding on consumers

Taylor said the FSCL's decisions, while binding on members, were not enforceable for consumers who had the option of taking the matter to court or else to a Dispute Tribunal.

Although the FSCL has seen its caseload double in its second year of operation, Taylor said public awareness about the schemes as a new recourse for consumers remained poor.

"By and large the majority of our participants are doing a good job understanding the new regulatory regime and fixing up complaints internally, if they get them, but I still believe consumer awareness is low. I'm even amazed among professional organisations, including solicitors and accountants, who haven't heard of the new regulatory regime."

Taylor said most of the cases the FSCL had dealt with to date related to insurance complaints with travel insurance complaints among the more contentious. (Amanda Morrall reports on the FSCL's 2012 annual report here).

"People really need to look at the policies closely because they are quite limited in scope. Some are limited to a max 35 days of travel so if you are away more than that you have no cover whosoever from day one of your travel. Some people would be quite shocked to know that."

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9 Comments

Quite frankly any body that

Quite frankly any body that invests in anything in NZ would be wise to assume that there is no effective discipline in the NZ investment industry.  The only action that is ever undertaken is when the breachs are so gross that it is impossible to ignore.  In these cases the failures are so catestrophic that there is little or nothing to recover and what is recovered is swallowed up by an army of recievers and hangers on.  The perpetrators get little more than a slap on the wrist.  Anything less where some good could be done or a situation arrested before it gets out of control never gets addressed as the whole industry and the supervisory bodies are populated by an old boys/girls network. 
Safest advice is assume that you have no useful support, trust no advisors and take total responsibility for your own actions.
If the government were serious in anything more than window dressing, then they would open up access to the trusts where the guilty ones stash their money.

Quite the opposite Ivan. The

Quite the opposite Ivan. The problem is that complaining after the fact won't miraculously locate $440m! What is likely to happen is that the remaining $10m will be gobbled up in legal and receivers fees over the next 5 years. bodies such as the FSCL were around pre 80s however disbanded as they were deemed ineffective. What's changed since then? Absolutely nothing.

Whats that going to achieve?

Whats that going to achieve? Sounds like "self interest" to me in terms of the advice offered by the FSCL

FSCL and other industry

FSCL and other industry participants have a real opportunity to be pro-active and help  educate NZ investors. What should investors look out for? What are the standards that the FAA insists on? What should a consumer expect to see and to hear when they invest money? C'mon, get off your chuffs and make a difference.  

Interest theses various

Interest theses various bodies have received millions $$$ in fees each year. They take very few complaints and resolve even less. Most losses are caused by fraud or illiterate consumers. You cannot solve a 5000 year old problem overnight and my personal view is it will never be solved. Reason = people are motivated by greed

That must be a Canuck custom

That must be a Canuck custom , Amanda ... .. but here in NZ we don't " weed out our bad eggs " ....
 
.... it is our native tradition to save them up for the Waitangi Day celebrations , and lob them at the Prime Minister ...

Ha. Her words not mine. I

Ha. Her words not mine. I better watch them celebrations next time. Sounds like it might actually be entertaining.