Complaints service criticised
Laurence Paton says he's been gagged.
Angry over his treatment by an insurer, he took a complaint to the Insurance and Savings Ombudsman.
At first, the ombudsman refused to accept the claim, saying it fell outside of the scheme's remit. It later decided to hear his case.
Now Paton is unhappy with the decision and also some aspects of the process which he claims are unfair.
He's unhappy because he feels prohibited from speaking out, as to take a claim to the scheme, complainants have to agree to stay mum, forever.
By law advisers must belong to at least one of the dispute resolution schemes including the Insurance and Savings Ombudsman, the Banking Ombudsman, Fairway Resolution, and Financial Services Complaints Limited.
Brought in after the collapse of the finance companies, the law dealing with consumer complaints was designed to give the public a free alternative to a long, and costly, legal fight.
But Paton is calling for any prohibition on speaking out to be scrapped as it denies the freedom of expression enshrined in the Bill of Rights.
And, Paton believes, the veil of secrecy masks public scrutiny of the schemes, which maintain they offer a free, impartial and independent channel for the public.
They put out "case notes" on some of their decisions, although the names of the banks, insurers and advisers complained of are removed, which critics say protects them, and in some cases means other wronged consumers don't learn they, too, would have a claim.
But the Banking Ombudsman said it was required by privacy laws to keep complainants' identities and details confidential under the scheme. But complainants can go public if they desire to.
And Financial Services Complaints Ltd chief executive Susan Taylor said it doesn't require a consumer to agree at the outset to confidentiality before investigating a complaint. However, sometimes during the course of a settlement negotiation, the scheme participant may request a confidentiality clause as part of the terms of a settlement. The consumer is free to agree to or reject that confidentiality clause, she said.
Patton is not alone in his concerns.
Christchurch accountant Cameron Preston says the banking and insurance schemes began as voluntary schemes by industries in a bid to stave off regulation by Government and remain largely unchanged.
There are big questions about whether they are suited to the role the law gives them, he says.
Preston believes, for example, that like auditors, ombudsmen shouldn't be allowed to hold office too long or they risk becoming too close to the industries they sit in judgment on.
The competitive structure of the schemes is also troubling, he says.
Companies can decide to leave one scheme and join another if they think the scheme is too tough on them.
It has happened to the Insurance and Savings Ombudsman scheme, says ombudsman Karen Stevens, although she says that proves that she does not go light on insurers.
But Preston, a Cantabrian grown cynical about the insurance industry, says the schemes depend on members for the fee income that pays their salaries and the competitive elements provides an incentive for them to go easy on those members.
But his biggest bugbear is that the secrecy prevents scrutiny about whether the schemes are biased in favour of the industries that pay their fees.
Not only is it blocking public discussion, but Preston is scandalised that it effectively blocked a five-year review of the schemes done by the Ministry of Business, Innovation and Employment.
It was supposed to look at whether the four schemes were operating fairly but while the schemes were interviewed, no complainants were.
"We could not fully establish how fair the dispute resolution process is for complainants because we did not interview them or survey them directly," the report said.
"We attempted to conduct interviews with consumers who went through the dispute resolution process. However, due to confidentiality reasons we could only obtain contact details of one complainant."
So it spoke to the likes of budgeting services instead, and concluded there were no signs that complainants were treated unfairly.
Preston says that amounts to a "paper review" with no substance.
He sums it up this way: "Secrecy = can't identify issues = there aren't any issues = no problem = go away."
The review has also not been well received by the schemes which feel they had little input into it, and could have helped the ministry properly evaluate how unbiased they were, and if there were concerns, proposed possible change.
"Usually a review leads to improvements. A review for its own sake simply to meet the requirement to do a review is not helpful," Stevens said.
Stevens said if the reviewers had asked to contact complainants, the scheme could have helped by calling complainants to find out if they were willing to let their details be passed on.
Both she and banking ombudsman Deb Battel defend their schemes, which pay external consultants and lawyers themselves to review their work. That works produces evidence the ministry never saw, they say.
Battel said: "We work extremely hard to be fair and add value, and we are absolutely scrupulous about being fair and independent."
Stevens said: "What we are here to do is run a free, impartial and independent process for people to agree outcomes themselves, or we will impose a decision that is fair and reasonable in the circumstances. It doesn't mean people always get what they want."
And as for the secrecy, both Battel and Stevens say angry complainants do go to the media, and there are no sanctions for breaking the confidentiality agreement.
The confidentiality stipulation to take a complaint was an international convention, but it may be weakening in some countries. There's no indication from the ministry's report that there are any plans to change it here.
There are four disputes resolution schemes available for the likes of banks, insurers and advisers to be members of, but the public is barely aware of their existence, if the survey done as part of the Ministry of Business, Innovation and Employment's review is to be believed.
Some 500 people were asked: "Imagine you were in a dispute with a financial service provider. Can you think of organisations or services that you could approach to get some information about how to settle the dispute?"
Here's what they said: 19 per cent Banking Ombudsman 16 per cent Lawyer 16 per cent Citizens Advice Bureau 7 per cent Bank manager 6 per cent Disputes tribunal 5 per cent Consumer NZ 3 per cent Ombudsman (non-specific) 1 per cent Insurance & Savings Ombudsman 1 per cent Local council 1 per cent Commerce Commission Less than 1 per cent Financial Markets Authority
* This story has been correct. The Banking Ombudsman and FSCL say complainants were not gagged from going public.
Sunday Star Times