Dispute volumes across New Zealand’s financial services sector have reached their highest recorded levels across two approved schemes simultaneously – and for insurers, the data points not to a single-year spike but to a structural shift now drawing direct regulatory attention. Financial Services Complaints Limited (FSCL) investigated 532 disputes in the 2025/26 reporting year, a 49% increase on the prior year and the highest figure since the scheme was established in 2010, according to a media release dated July 22, 2026. Those disputes arose from 1,596 complaints received between July 1, 2025, and June 30, 2026. FSCL Financial Ombudsman Susan Taylor attributed the record to ongoing household financial pressure and a growing number of consumers using AI tools to lodge complaints.
For insurance professionals, the most operationally significant reading in FSCL’s data is not the headline figure. Insurer disputes at FSCL held at 64 cases in 2025/26, compared with 63 the prior year – but that near-flat result follows a move from 46 cases in 2023/24, representing a roughly 39% increase sustained over two consecutive years without reversal. That pattern holds across both of New Zealand's approved dispute resolution schemes. The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) accepted a record 600 disputes for investigation in the year from July 1, 2024, to June 30, 2025 – a 25% increase from the previous year. Of those disputes, 67% related to general insurance products such as house, contents, motor, and travel policies, with house insurance making up nearly a quarter of all complaints, motor vehicle at 19%, and travel at 18%.
The Financial Markets Authority (FMA) has read the same trend. Its second annual Financial Conduct Report (FCR), published June 30, 2026, names complaints handling as one of three insurer-specific regulatory priorities for 2026/27, alongside product design and fraud detection. From its 2025/26 monitoring, the FMA found that only some insurers have comprehensive complaints policies that are regularly reviewed and updated, and that the use of complaints data to drive product improvements remains inconsistent across the sector.
The regulator said boards and executives should be treating complaints trends as a material input into product and service decisions, not managing complaints as a standalone compliance function. The FMA singled out travel insurance by name, describing it as consistently one of the most complained-about products according to dispute resolution scheme data and confirmed it will carry out specific work in that area during 2026/27.
The tripling of transactional service provider disputes at FSCL – from 28 cases in 2024/25 to 88 in 2025/26 reflects a broader scam environment with direct product implications for insurers. FSCL linked the increase to service failures, misdirected payments, and consumer requests to recover funds lost to scams. New Zealanders lost a gross total of $265 million to fraud in the 12 months to September 2025, according to the first Reported Fraud Monitor published by Payments NZ, which aggregated figures from 12 banks. Of that total, approximately $126 million involved authorised payment scams – cases where individuals were manipulated into approving transactions themselves – and the remaining $139 million came from unauthorised account access.
The cyber loss trajectory compounds the picture. The National Cyber Security Centre (NCSC) responded to 1,164 incidents in the first quarter of 2026, with direct financial losses totalling $5.6 million – a 76% increase from the $3.2 million recorded in Q4 2025. Three incidents were classified as C2, or “highly significant” – the first at that severity level since the 2021/22 financial year. For insurers carrying cyber, fraud, or payment protection products, those figures are claims-environment data as much as they are public safety statistics.
The FMA’s fraud priority in the FCR is directed specifically at insurance fraud, alongside mortgage fraud and KiwiSaver first-home withdrawal misuse. The FMA identified fraud as a significant cross-sector risk, noting it can cause severe financial harm including unmanageable debt, denied claims, and loss of savings, and said it is assessing how effectively firms remediate consumers affected by fraud. Taylor called on providers to take a more active preventative role. “Scams remain a serious issue, and can have devastating impacts. We encourage providers to be proactive in educating consumers about scam risks and to be clear about what support they offer when things go wrong,” Taylor said.
The sharpest single-category movement in FSCL's data sits outside the insurer segment but carries conduct implications relevant to the broader sector. Disputes against fund managers and superannuation schemes rose from 10 cases in 2024/25 to 47 in 2025/26, driven largely by difficulties with KiwiSaver significant hardship withdrawal applications. FSCL reported that applicants commonly struggled to understand what evidence was required, experienced processing delays, or found decisions were inadequately explained. “A KiwiSaver hardship withdrawal is often a last resort. Once people reach that point, they need clear information, a timely response, and compassionate communication,” Taylor said. The conduct standard FSCL describes for those cases – clear information, timeliness, and communication quality – directly mirrors the expectations the FMA is applying to insurer complaints processes in its 2026/27 priorities.
The dispute data lands against a heightened enforcement backdrop. In October 2025, the Auckland High Court ordered IAG New Zealand to pay a $19.5 million pecuniary penalty after the insurer admitted fair dealing breaches relating to premium pricing and discounts, in what the FMA described as its largest fair dealing case to date. The FMA’s own consumer research found that only 29% of New Zealanders are confident they know what steps to take if treated unfairly by a financial service provider, and 40% lack confidence in what actions to take. That awareness gap helps explain why disputes continue reaching external schemes rather than being resolved internally – and it is the condition the FMA’s complaints priority is designed to address.
Taylor noted that awareness of FSCL’s free service remains limited despite the record caseload. “While dispute numbers have grown, there’s still room to improve awareness that independent help is available, for free, if a consumer cannot resolve a problem with their financial service provider,” she said.
