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The Banking Ombudsman: How to resolve disputes with your bank

Key Takeaway

The Banking Ombudsman is an independent scheme helping resolve disputes between consumers and their banks in New Zealand. It considers consumer protections under laws like the Consumer Guarantees Act 1993 and the Fair Trading Act 1986, which prohibit misleading conduct and ensure services meet certain standards. Complaints should first go to the bank, then to the Ombudsman if unresolved.

Resolving Disputes with Your Bank: The Banking Ombudsman Scheme

When a dispute arises between a customer and their bank in New Zealand, the Banking Ombudsman Scheme provides an independent process for resolution. This scheme operates within the framework of key consumer protection legislation, including the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.

The Banking Ombudsman Scheme

The Banking Ombudsman Scheme is an independent, free dispute resolution service available to customers of participating banks. Banks that provide financial services to retail clients in New Zealand are generally required to belong to an approved dispute resolution scheme [Source: Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 48]. The Banking Ombudsman Scheme investigates complaints, facilitates mediation, and can make binding decisions to resolve issues without the need for court proceedings.

The process typically involves first raising the complaint directly with the bank. If the bank cannot resolve the complaint to the customer's satisfaction, or if a reasonable time has passed without resolution, the complaint can then be referred to the Banking Ombudsman.

Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) sets out guarantees for goods and services supplied to a consumer. A consumer is defined as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use [Source: Consumer Guarantees Act 1993, s 2]. A supplier is a person who supplies goods or services in trade [Source: Consumer Guarantees Act 1993, s 2].

When banks provide services, they must adhere to specific guarantees under the CGA:

  • Reasonable care and skill: Services must be performed with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28(a)]. This means that the service provider, such as a bank, must exercise the level of competence and diligence expected of a reasonable professional in that field.
  • Fitness for particular purpose: If a consumer makes known to the supplier any particular purpose for which the services are being acquired, or the result that the consumer wishes the services to achieve, and relies on the supplier's skill or judgment, the services must be reasonably fit for that purpose or of a nature and quality to achieve that result [Source: Consumer Guarantees Act 1993, s 28(b)].
  • Reasonable time: If the time for the services to be provided is not fixed by contract, they must be completed within a reasonable time [Source: Consumer Guarantees Act 1993, s 28(c)].
  • Reasonable price: If the price for the services is not fixed by contract, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 28(d)].

If these guarantees are not met, the consumer may have remedies under the CGA, which can include cancelling the service or seeking damages for any loss or damage suffered [Source: Consumer Guarantees Act 1993, Part 3]. The Banking Ombudsman Scheme may consider whether a bank's actions have breached these guarantees when investigating a complaint.

Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) is designed to protect consumers from misleading and deceptive conduct and unfair trading practices by businesses. It applies to all conduct in trade [Source: Fair Trading Act 1986, s 2].

Key prohibitions under the FTA that are relevant to banking disputes include:

  • Misleading and deceptive conduct: No person in trade shall engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. Misleading and deceptive conduct refers to actions or statements that could lead a reasonable person into error.
  • False or misleading representations: No person in trade shall, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services, make a false or misleading representation regarding various aspects, such as the nature, quality, or standard of services, or the existence of a guarantee or warranty [Source: Fair Trading Act 1986, s 13].
  • Unsubstantiated representations: Businesses must have reasonable grounds for any representation they make about goods or services at the time the representation is made [Source: Fair Trading Act 1986, s 12A].

The FTA also prohibits various unfair practices, including offering prizes or gifts with no intention of supplying them, or demanding payment for unsolicited goods or services [Source: Fair Trading Act 1986, Part 2]. Breaches of the FTA can result in penalties, and affected consumers may be able to seek damages through the courts. The Banking Ombudsman can assess whether a bank's conduct in a dispute aligns with the requirements of the FTA.

How the Banking Ombudsman Addresses Complaints

When investigating a complaint, the Banking Ombudsman will consider the relevant facts and circumstances, often taking into account whether a bank has met its obligations under consumer protection laws like the CGA and the FTA. The Ombudsman's role is to determine if the bank's actions were fair and reasonable, and if not, to facilitate a resolution or make a determination on how the bank should address the customer's complaint. This can include directing the bank to pay compensation or take specific action to remedy the issue.

When to Seek Independent Legal Advice

It is important for individuals experiencing a dispute with their bank to understand their legal rights and obligations. While the Banking Ombudsman Scheme offers a valuable resolution pathway, it does not provide legal advice. Individuals may consider seeking independent legal advice from a qualified lawyer, especially for complex cases or to understand the full range of legal options available. For free initial advice, individuals can contact Community Law Centres throughout New Zealand [https://communitylaw.org.nz/].

Key Resources