New Zealand’s Chief Ombudsman, Peter Boshier, has identified significant shortcomings in the Ministry of Social Development’s (MSD) compensation scheme for survivors of abuse in state care.
The criticism comes as separate data highlights a surge in complaints across the country’s insurance and financial services sectors, reflecting systemic challenges in addressing public grievances.
In a recently published report, Boshier described the ministry’s payment benchmarks as “arbitrary and unreasonable,” raising concerns about the fairness of the process. The findings follow a complaint lodged by Cooper Legal, a firm representing more than 1,000 claimants.
The scheme, introduced in 2007, was designed to resolve abuse claims outside the court system, but Boshier’s report indicated systemic issues in its administration.
“There is no doubt that the claims raised a host of difficult legal, ethical, emotional, and financial issues for all of the agencies involved including the ministry,” Boshier said. “In some respects, the ministry can justify the steps it is taking. However, some aspects of the scheme and the way it is being administered are unreasonable.”
One of Boshier’s central criticisms is the low payment benchmarks used to calculate compensation, which he argued fail to reflect the harm experienced by individual survivors.
He also pointed out that these benchmarks lack a clear rationale and fall short when compared to other state compensation schemes or international practices.
“The underlying benchmarks for payments are low and the degree of harm to an individual claimant is not fully considered when these are assessed,” he said, echoing concerns raised by the Abuse in Care Royal Commission of Inquiry.
Boshier also scrutinised the scheme’s restrictive criteria for accepting claims, noting that survivors are often denied compensation if their abuse is not documented in official records. This approach, Boshier argued, is problematic given MSD’s own acknowledgment of poor historical record-keeping.
“It’s unreasonable for the ministry to refuse a claim simply because it can’t find information to substantiate it within its own records. The ministry must take a broader approach. People should be invited to put their own evidence forward to substantiate an allegation,” Boshier said.
Boshier called for improvements in how rejected claims are handled, recommending that claimants have a clear and accessible pathway to request reviews.
He also stressed the importance of transparency, urging MSD to inform survivors of their right to have decisions reviewed by the Ombudsman.
“The ministry must make clear when any settlement is reached, a claimant has the right to seek an independent investigation of its approach by the Ombudsman,” he said.
While the government is working to develop a new redress system in response to recommendations from the Abuse in Care Royal Commission, Boshier urged MSD to take immediate steps to address shortcomings in its current processes.
“The ministry should use my findings as a basis to make improvements to its current processes, and they should also be considered in the design of the new redress system,” he said.
Boshier’s findings add pressure on MSD to enhance its approach to compensating survivors, highlighting the need for both interim adjustments and long-term reform to improve outcomes for claimants.
In parallel with the MSD’s challenges, the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) reported its highest-ever number of enquiries and complaints in the past year.
Nearly 5,000 enquiries were recorded, a 21% increase from the previous year, with 479 formal complaints investigated – a 46% rise.
Karen Stevens, the Insurance & Financial Services Ombudsman, attributed the surge to the 2023 Auckland floods and Cyclone Gabrielle, which led to nearly 118,000 insurance claims. About 8% of the complaints received were directly related to these weather events.
As of June 2024, most weather-related claims were nearing resolution, with over 112,000 settled. However, the delays exposed challenges in the industry’s ability to respond to large-scale disasters quickly.
