When the FSCL said that rising complaints was good news for financial services a few onlookers scratched their heads.

With the NZI PI insurance debacle fresh in many advisers' memory, some are thinking that rising complaints are proving insurers' fears that providing professional indemnity cover to advisers under the new regime may prove too risky.

But principal of Financial Focus, Murray Weatherston, says that the levels of complaint seen in New Zealand are actually relatively low. For the FSCL in 2020 there were only 298 investigations completed – 91 of which were settled, 103 discontinued and 44 resolved early by the participant. Only 42 cases went all the way through to the end of the process.

Weatherston believes that these numbers reflect the health of the DRS systems and of the industry as a whole.

“The situation is clear. If the client has a complaint that the provider cannot deal with, then the consumer has the right to go free of charge to a dispute resolution scheme. The fact that the numbers are low means that the adviser industry is in good health.”

One caveat that Weatherston adds: “Given the ways the investment markets have been performing it is very hard to see why any consumer would have anything to complain about regarding investment advice.”

Weatherston believes that when analysing the performance of the DRS it is important to remember that the markets have largely been kind. “It’s hard to complain when you are not losing money. It will be interesting to see, if markets turn, if that will lead to an increase in disputes.”

The confusion around what the numbers of complaints means for the industry stems from a misunderstanding of the way the systems work, Weatherson says.

“Some people think that the consumer can go straight to the DRS to make their complaint, that is not the case. The consumer has to go to the adviser first, and only if they can’t get a solution there can they then approach the scheme.

“Many people don’t understand that to even get to the DRS there has to be a complaint that has not been settled through the adviser-client channels.”