Southern Response wrongly withheld council refunds from customers

Labour candidate Duncan Webb says Southern Response's processes are flawed.
Iain McGregor

Labour candidate Duncan Webb says Southern Response's processes are flawed.

Southern Response may owe homeowners thousands in wrongly withheld refunds.

Southern Response, the government-owned company responsible for settling Canterbury earthquake claims for AMI Insurance policyholders, has received refunds from Christchurch City Council that rightfully belong to homeowners.

Southern Response can either manage construction work for claimants, or give a cash settlement.

Over two thirds of the 6648 claimants opted for cash settlements, but in some cases Southern Response had already started the rebuild process, including applying for consents from the council.

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In this case, Southern Response would deduct expenses already paid from the cash settlement.

When consents lapse, any money paid to the council for inspections and other costs that was not used is refunded.

Robert Wright, head of building consents at Christchurch City Council, said the money would be paid back to whoever paid for the consent, whether that be the property owner or an agent.

"If the work does not proceed or the consent lapsed we refund the agent who paid the invoice."

In cases where Southern Response has deducted the consent cost from a claimant's cash settlement, the claimant is entitled to the consent refund.

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Duncan Webb, Labour candidate for Christchurch Central, requested information from the company about how many people might be affected.

"Southern Response has not provided information on how much it has wrongly withheld, or how many homeowners are affected."

The company wrote back to Webb, saying the standard process from that point on would be to forward the refunds to entitled claimants.

Webb said that showed Southern Response's existing processes were flawed.

"It must have been obvious that these payments belong to the homeowner," he said.

"If payments of this nature are being overlooked then there may be real concerns about other processes which are not subject to the same scrutiny – it was pure chance I picked this up."

The council informed Webb there were 192 lapsed consents belonging to Southern Response's agent.

"If each consent has average of $1600 refund due, that is over $300,000 which has been wrongly withheld," Webb speculated.

A Southern Response spokeswoman said the company was working with the council to get a better understanding of the situation.

"As part of this process, we are currently reviewing a relatively small number of lapsed consents where customers have opted late in the claim settlement process (after consents have been applied for) to cash settle."

She said Southern Response was in the process of confirming whether refunds for lapsed consents had already been paid to the claimants.

"It is Southern Response policy to pass the refund on to the customer once it has been received from the respective Council," said the spokeswoman.

She said any claimant who believed they were entitled to a refund should contact their claims specialist.

 - Stuff

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