A scaffolder in New Zealand has secured a $17,500 settlement from his former financial adviser after discovering he did not have the accident insurance he believed was in place.
The dispute was resolved through Financial Services Complaints Limited (FSCL), an independent ombudsman service for financial disputes.
According to RNZ’s report, the scaffolder originally obtained life insurance through the adviser several years ago. In 2022, he sought additional accident coverage, which the adviser recommended taking with a new insurer.
However, after sustaining an ankle injury in 2023 that left him unable to work, the scaffolder learned no accident insurance had been arranged. He had to wait a year for public hospital treatment instead of pursuing private surgery.
The scaffolder raised concerns that the adviser failed to properly explain the coverage transition. He also alleged that when he initially complained, the adviser claimed scaffolders could not obtain accident coverage with the new insurer.
A new adviser disputed this, stating that accident coverage was available and arguing that it would have been better to adjust the original policy if the coverage could not be secured with the new insurer.
The scaffolder further alleged that he was discouraged from filing a complaint because the process would require expensive legal representation. FSCL clarified that its services are free to the public and noted concerns about advisers discouraging complaints.
During the FSCL investigation, the adviser’s professional indemnity insurer offered $17,500 to resolve the dispute. This amount included approximately $15,000, representing potential claim benefits minus premiums, and $2,500 for stress.
FSCL deemed the offer reasonable, and the complaint was settled without a formal investigation into the adviser’s conduct.
Although the settlement resolved the financial aspects, FSCL highlighted the seriousness of allegations that the adviser may have sought to dissuade the client from filing a complaint. Due to a lack of written evidence and the absence of a complete investigation, no findings were made on this issue.
FSCL emphasised that financial advisers must meet regulatory requirements under the Financial Markets Conduct Act, including providing clear information about complaints processes and the availability of free dispute resolution services.
The case reflects a growing number of complaints handled by FSCL, which reported a 6% increase in complaints over the past year, totalling 1,426 cases. Formal disputes requiring in-depth investigations rose by 10% to 359.
Economic pressures and regulatory changes, including a rise in FSCL’s compensation cap to $500,000 in July 2023, have contributed to the uptick in complaints. Financial Ombudsman Susan Taylor expects complaint volumes to remain high as these factors persist.
Complaints against lenders accounted for the largest share of FSCL investigations, particularly for car loans, personal loans, and small business financing. Disputes over consumer credit products, credit cards, and mortgages were also significant. Complaints involving financial advisers and insurers rose by 18% and 14.5%, respectively, over the past year.
