This year marks the silver anniversary of the New Zealand Banking Ombudsman Scheme, and it is remarkable to look back on banking, and banking complaints, over the last 25 years.
When the Banking Ombudsman Scheme started out in 1992, we had been dealing with our money the same way for decades. Banking was done at branches, payments were mostly by cash or cheque and EFTPOS machines were rare. But a technology boom was about to hit. ‘Brick’ phones were getting smaller, the internet was only two years away and text messaging was about to be invented – the world’s first text was sent by a British software engineer on 3 December 1992.
Fast forward 25 years and banking has come a long way. Very few people visit a branch, most payments are cashless and we use our phones to do the lot – bank, pay, trade and budget. Anyone aged under 30 is considered a digital native as they have not known life before the internet.
As banking has changed over the last 25 years, so have banking disputes. These days a banking dispute is more likely to be about online scams or the costs of lending than cheques or fees.
The Banking Ombudsman Scheme was the first of its kind when it was established in 1992. The banks funded it as a free dispute resolution service for their customers. It meant customers could raise issues they wouldn’t have had the time or resources to pursue through the courts. It was a fair, simple and speedy way to resolve disputes, at no cost to the customer.
It was a pioneering step for consumer protection – no other area of the private sector had taken up the ombudsman concept at the time. And it was a step the banks took upon themselves to progress, well before the government requirement in 2008 for all financial services and lenders to be part of an independent dispute resolution scheme.
The scheme had to work hard in the early days to establish its independence, integrity and authority. Complaints generally required investigation, and a detailed determination much like a court judgment. Correspondence was comprehensive and formal, largely to assure complainants that the scheme had thoroughly considered all of the matters raised in the complaint.
Overall the banks supported the scheme, but they were often more adversarial than they are now, with at least two banks threatening to withdraw from the scheme in response to receiving adverse decisions. They struggled to get past their indignation at being the subject of a complaint, just as they found it hard to consider what might have led to a complainant to becoming so unhappy. This is a far cry from today’s attitude by banks, which is to see complaints as a way to learn from and improve their practices.
Once it had established its reputation for fairness and independence, the scheme was able to encourage direct and early resolution, which meant a better chance of getting the bank-customer relationship back on track. The scheme has the freedom to apply best practice, and to look at what is fair and reasonable – while still being guided by the law. Complaints are often resolved by facilitation, either before or during the formal investigation stage. Even disputes that go to an investigation and formal decision are dealt with comparatively swiftly.
Customer expectations have changed. With the rapid growth of technology in recent years, people now expect the world to turn faster, and real-time solutions are the priority. The scheme has to be faster and more innovative with resolution services and use of technology to meet those expectations and remain accessible.
As the global marketplace expands, new issues arise with customers dealing in different currencies and payment platforms. Many of the intermediaries have been removed and customers now purchase directly from the source at speed. But with that brings the risk of cybercrime and the need for personalised controls and new standards of conduct.
But the scheme is still working at the forefront of dispute resolution. It now has an increasing focus on prevention and education, for banks as well as customers. The lessons from casework are fed into the scheme’s website, social media and education material and, as a result, the case numbers are changing, with a much larger proportion of cases resolved at the early stages in recent years. Remaining relevant and accessible, especially to younger customers, has been another priority. This will continue to shape the communication channels the scheme uses to connect with its audiences.
The scheme has been at the forefront of change in more ways than one. It is led by an all-female leadership team – the Chair of the Board, Miriam Dean CNZM QC, the Banking Ombudsman, Nicola Sladden, and her two deputies. In fact since its inception in 1992, the Scheme has always been led by a female Banking Ombudsman, namely Nadja Tollemache, Liz Brown and Deborah Battell.
If the past 25 years are any guide, the scheme will continue to have its hands full in the years to come. The future of banking will be shaped by technology and innovation, by the law, and by our social and demographic changes. But no matter what the sector may look like in the years to come, the scheme will continue to provide fair, fast and free dispute resolution.
Tina Mitchell firstname.lastname@example.org is the Deputy Banking Ombudsman – Prevention. Her role is to share insights from cases and sector developments to encourage best practice by banks and informed banking decisions by customers.