Financial Services Complaints Limited (FSCL) is reporting higher dispute volumes and sustained pressure on its case pipeline.
FSCL’s Financial Ombudsman Service recorded a 41% increase in disputes in the first half of its current reporting year. Between July and December 2025, 235 disputes were opened, compared with 167 in the same six‑month period in 2024. “The increase reflects wider economic challenges that many New Zealanders continue to face. We expect high dispute levels to persist as long as economic conditions remain difficult for many,” Financial Ombudsman Susan Taylor said.
Taylor said the higher number of disputes reflects both economic conditions and greater awareness of external dispute resolution schemes, with more consumers prepared to question decisions made by financial providers. “Disputes are complaints we investigate to negotiate solutions between consumers and their financial services providers,” she said. Many complaints, she noted, are settled or withdrawn before reaching the dispute stage.
FSCL’s half‑year data shows lenders generated the largest share of opened disputes at 77, up from 73 a year earlier. Disputes involving fund managers handling KiwiSaver withdrawals rose to 31 from five, while disputes involving insurers increased to 31 from 23. Transactional service providers were the subject of 27 disputes, compared with 18 in the prior period, trustee companies 16 (up from 10), and card issuers 27 (down from 32). Disputes involving financial advisers declined to 26 from 40. For insurers and intermediaries, the figures indicate that complaints are spread across multiple parts of the value chain, from product manufacture and advice to administration and claims handling.
KiwiSaver hardship withdrawal refusals are currently the largest single contributor to dispute numbers, according to FSCL. Many consumers are attempting to access retirement savings to pay ongoing expenses or address housing costs but are not meeting the statutory hardship criteria set out in the KiwiSaver Act. “People often don’t realise how strict the KiwiSaver rules are, leading to complaints about declined applications. We see people with ideas about using their KiwiSaver for longer-term financial relief,” Taylor said, citing a recent case in which a woman sought to withdraw KiwiSaver funds to buy a tiny home instead of renting. In that case, she obtained only a smaller, short‑term financial solution.
“We understand this is frustrating when you need financial security, but KiwiSaver savings are meant for your retirement. You can’t access your funds before retirement, except for a few limited exceptions, and this is reflected in the act, rules, and industry guidance,” Taylor said. For providers involved in KiwiSaver and related retirement products, FSCL’s experience points to frequent issues around customer understanding of withdrawal rules and the gap between expectations and the legislative framework.
The latest half‑year dispute numbers follow FSCL’s annual statistics to June 30, 2025. Over that 12‑month period, FSCL received 1,469 complaints, up from 1,426 the previous year and about twice the total recorded five years earlier. Lenders accounted for 38% of all complaints to the scheme, although most of these were resolved before requiring a formal dispute investigation. The number of disputes that did proceed to investigation increased by 4% over the year, and FSCL reported shifts in the types of services and issues involved. Of the 366 investigated disputes, complaints about financial advisers – including mortgage and insurance brokers and wealth advisers – made up 23%. Complaints about lenders accounted for 20%, and insurers for 17%. FSCL has also seen more complaints from small businesses, particularly related to business lending and insurance cover.
