As economic pressures grow on consumers, there has been an increase in the number of financial services complaints. Financial Ombudsman, Susan Taylor, reported that there was a 17.5% surge in complaints lodged in the six months leading to December 2022.
She noted that issues like higher interest rates and the rising cost of living were causing consumers to increasingly struggle to meet their loan repayments. Taylor is advising consumers to speak to their lenders before this problem arises and make use of the free financial dispute resolution services.
64% of the financial services complaints were related to non-bank lenders, however, lender complaints were found to have also increased by around 7%. There was also an 80% increase in complaints related to transactional service providers. This includes money transfer agencies, forex dealers, and trading platforms.
Taylor noted that some of the complaints appeared to be related to get-rich-quick schemes that consumers were being duped into in an attempt to relieve financial pressures. She highlighted cases such as those where consumers would use transactional service providers to send money for offshore investments like cryptocurrency, only to realise they were scammed and blame the money transfer agency.
Mainstream providers like ANZ are also facing complaints, with a recent scam that led to the loss of $40,000 from the account of an 82-year-old woman having been publicised. The scammers impersonated the woman when calling ANZ and successfully moved money between her accounts, convincing her to purchase almost $40,000 in pre-paid gaming vouchers. Despite her son having power of attorney over his parents’ financial affairs and ANZ’s fraud detection measures, thousands of dollars were swindled over 12 days.
The Financial Markets Authority (FMA) is also advising consumers to be careful of scams that are targeting social media users. They feature offers of fake investment opportunities from big banks. Magnitude Financial was highlighted as an alleged participant in the scams, using social media ads that indicate various financial services from banks like Westpac and SBS Bank. Both banks have denied having any association with Magnitude Financial. Westpac has expressed concern over the use of its name and logo on the ad and is advising consumers to check with them when they identify Westpac financial products that are being offered by a third party.
The FMA is reiterating that for a company to provide financial services in New Zealand, it must be publicly registered on the Financial Service Providers Register (FSPR). It confirmed that Magnitude Financial is not registered and that it would be making enquiries into the company and what action could be taken against it.
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