Poor communication behind many financial services complaints, says dispute resolution service

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A dispute resolution service in New Zealand has seen a 21% increase in enquiries and complaints this year, with many of them stemming from poor communication between financial services providers and their clients. 

The organisation, Financial Services Complaints Limited (FSCL), said that its annual results had shown a steady year-on-year increase since the scheme was established in 2010.

The largest share of FSCL’s formal investigations concerned insurance complaints, followed by consumer credit issues. The organisation has also seen an increase in complaints about the sale of personal insurance products.

It’s a reminder to financial service providers to communicate with their clients in plain English and to ensure the client understands the ins and outs of any contract they are about to enter.
— Susan Taylor, FSCL Chief Executive Officer

Susan Taylor, FSCL’s Chief Executive Officer, said that a common theme underlying the complaints it investigated was a communication breakdown. 

“Many complainants say they were not given important information, or that the information they were given was ambiguous or poorly worded,” said Taylor. 

“Other times the complainant hasn’t disclosed certain information or simply hasn’t understood the information provided, be that the terms of an insurance policy or a written recommendation or plan.”

As an example, Taylor highlighted a complaint that arose from the Kaikoura earthquake in November 2016, where an insurance broker had not told their client about policy limitations for their business interruption insurance cover.

FSCL said that the complaint could have been avoided if the broker had better explained the policy’s limitations at the time of sale.

“It’s a reminder to financial service providers to communicate with their clients in plain English and to ensure the client understands the ins and outs of any contract they are about to enter,” said Taylor.

“Equally, consumers need to communicate clearly and openly with their financial service provider and take responsibility for clarifying anything they don’t understand.”

The benefits of plain English communication

A growing number of organisations have highlighted the difficulties caused when businesses do not use plain English in their communications.

Earlier this year, for example, a UK law firm found that the terms and conditions on many social media sites would require a child or young person to have a post-graduate degree in order to make sense of them.

Meanwhile, a poll by a fleet management company found that more than half of motor industry customers had been left confused by industry abbreviations or jargon.

But some organisations are getting it right – such as EirGrid, the firm that manages and operates Ireland’s electricity transmission grid.

The company was recognised with a plain English award earlier this year for a document explaining how the public could influence its plans for developing the electricity grid – showing that even the most complex subjects can be communicated clearly with a bit of effort.


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