The Financial Markets Authority (FMA) has released its inaugural Consumer Experience with the Financial Sector Survey, which found that only 31% of Kiwis are confident in knowing what to do if they experience unfair treatment from their financial services provider.
“This is an area I want to pay much closer attention to, as it appears that many customers simply do not know how the complaints process should work for them,” said Samantha Barrass, FMA chief executive.
According to the nationally representative survey, New Zealanders are generally satisfied with their financial service providers, with 77% of DIY investing platform customers satisfied. Bank and insurance customers were similarly satisfied at 71% and 70%, respectively. The satisfaction rate of KiwiSaver provider and fund manager customers was lower at 61%.
While customer satisfaction was somewhat high, trust in financial institutions was lower, with 67% of consumers trusting banks and only 48% of consumers trusting insurance companies. Despite the low trust in insurance, around 90% of health, car, contents, and pet insurance claims were successful. However, travel and home insurance claims were significantly less likely to be successful.
Around one-third of respondents said that they have experienced a problem with their financial services provider, with investments not performing as they were led to believe, poor service, and unexpected fees/charges or interest rates as the top three complaints.
Five per cent of New Zealanders have made a complaint, but only a little more than half of them said they were satisfied with the complaint’s resolution.
“We found an additional seven per cent (above the five per cent who complained) would have liked to make a complaint but didn’t, meaning more than one in 10 customers were considering a complaint of some kind,” Barrass said. “Those who decided against making a complaint felt the process was either pointless or too difficult.”
Other findings of the survey include 22% agreeing that they don’t understand the financial products they have and whether they got a good deal, versus 46% that disagreed and 30% that were indifferent.
Māori and Pacific Peoples were significantly less likely to feel in control of their day-to-day finances but are more likely to have high-risk products. Young men, Māori and Indian people have significantly higher ownership rates of cryptocurrencies than other demographic subgroups.
Over the past 12 months, 18% of people have engaged with a financial adviser, mortgage broker, or insurance broker, showing that advisers and intermediaries are not able to reach a wide segment of the population.