Banks play an important role in our everyday lives, from managing personal savings and mortgages to handling business transactions.
However, disputes can arise when customers believe their bank has acted unfairly, made a mistake, or failed to meet its obligations.
In New Zealand, customers who are unable to resolve a dispute directly with their bank may be able to seek assistance from the Banking Ombudsman Scheme, an independent and free dispute resolution service.
What types of banking complaints can be made?
The Banking Ombudsman considers a wide range of complaints involving banking services, including:
- Unauthorised transactions, banking fraud and scams.
- Disputes over mortgages, loans and lending practices.
- Incorrect fees, charges or interest calculations.
- Bank accounts being frozen, restricted or closed.
- Mistakes involving payments and money transfers.
- Allegations of unfair treatment or poor banking practices.
- Failures to provide accurate information or follow agreed procedures.
- Disputes concerning financial hardship and repayment arrangements.
The Ombudsman can consider complaints from individuals, businesses, trusts and other organisations, provided the financial institution belongs to the scheme.
However, not every disagreement with a bank falls within the Ombudsman’s jurisdiction. For example, the scheme generally cannot investigate complaints challenging a bank’s commercial judgement, such as its decision not to approve a loan.
How does the complaint process work?
The first step is generally to raise the issue directly with the bank and give it an opportunity to investigate and resolve the complaint.
If the bank’s response is unsatisfactory, the customer can approach the Banking Ombudsman. The Ombudsman may initially help the parties reach an informal resolution. If the dispute remains unresolved, the matter can proceed to a more detailed investigation.
The Ombudsman considers the relevant evidence, the bank’s obligations, applicable laws and accepted banking practices before reaching a decision.
Customers who remain dissatisfied with their bank’s final response should act promptly. Generally, a complaint must be referred to the Ombudsman within three months of the bank’s final decision. A formal investigation can also be requested if more than two months have passed since the complaint was first made to the bank.
What outcomes are possible?
Where a complaint is upheld, the Banking Ombudsman may recommend compensation for financial losses, reimbursement of fees, correction of banking errors, or other appropriate remedies.
The scheme can award up to $500,000 for direct financial loss and up to $10,000 for significant inconvenience, subject to its rules.
Other outcomes may include an apology, correction of inaccurate records, changes to repayment arrangements, or reconsideration of a bank’s decision.
If the customer accepts the Ombudsman’s final decision, it becomes binding on the bank. Customers who reject the decision may pursue other available legal remedies.
How can a barrister help?
Although customers can make complaints to the Banking Ombudsman without legal representation, engaging a barrister may be beneficial where a dispute involves substantial financial losses, complex transactions, allegations of misconduct, or questions concerning a bank’s legal obligations. A barrister can assess the merits of the complaint, examine relevant banking records and correspondence, identify potential breaches of legal or contractual duties, prepare written submissions, and represent the customer in dealings with the bank or Ombudsman. Legal assistance may also be valuable when negotiating a settlement or considering whether court proceedings would be more appropriate. Clients should be aware that the Ombudsman’s service is free, but the cost of engaging a barrister will generally be their own responsibility.
Seeking legal assistance
Banking disputes can have serious financial and personal consequences, particularly where significant sums of money, business operations, or access to essential banking services are involved.
If you believe your bank has acted improperly or failed to meet its obligations, obtaining independent legal advice can help you understand your rights, evaluate your options, and determine the most appropriate way forward.
This article provides general information only and is not a substitute for legal advice about your particular circumstances.