The New Zealand Financial Dispute Resolution Scheme (FDRS) issued a report called "lessons for consumers and providers from year end 30 June 2015," providing data on the scope of issues handled by the official body.
According to the report, of the 2,919 registered enquiries, the FDRS recorded 475 complaints. 370 of those were referred back to the members complaints process. Of the balance, 84 escalated to the FDRS formal disputes process and 59 of those were resolved ; 36 by early resolution, including 2 conciliation settlements. 23 disputes were resolved in adjudication. Of those, 16 complaints were upheld.
Since year end, the report reveals that many of the complaints referred back to members have reached deadlock and escalated to the scheme's formal disputes process. Of 82% of total complaint enquiries, the prevailing systemic issue was “failing to follow instructions.”
Specifically, the providers did not respond to customers' requests to reimburse investments, even after they had made a formal complaint to the members. These inevitably resulted in deadlock and ultimately the enforcement of the scheme's adjudicator's order to repay.
Interestingly, the FDRS points out that only one of the disputes on hand at year end does not relate to a Forex Trading Platform . However, no data was provided on the steps or punitive measures that might have been taken against the member firms that did not comply.
In conclusion, the key lessons offered by the FDRS for consumers, from the disputes resolved and systemic issues, is to check the credentials of providers, not to enter into terms and conditions without understanding them, or where there is no reputation at stake.
For member firms, it is to provide regular, clear and concise disclosure and to review decisions posted on websites for guidance as to what is considered fair and reasonable in the context of code, legislation and common law.
The FDRS is an independent dispute resolution scheme for consumers and financial service providers to use when they are unable to resolve a dispute. It was established by the New Zealand government as the reserve scheme to be part of a regime that provides greater accountability and transparency in the financial sector.
