Push for 'super complaints' system to protect NZ consumers

Thursday, 24 July 2025

The Government is intent on cutting ‘red tape’ in financial services, and it’s making debt advocates nervous.

New Zealand needs to create a system of consumer “super complaints” mirroring successful regimes in the UK and Australia, MPs have been told.

Despite strong consumer protection and lending laws, consumer and debtor advocates remain frustrated that companies continue to engage in behaviour they consider to be illegal.

Now they have told MPs they want a mechanism known as “super complaints” to force regulators to act swiftly to investigate complaints made by a small set of authorised super complainers.

These could include Consumer NZ, Community Law Centres of Aotearoa, and FinCap, the umbrella organisation for financial mentors.

Under a super complaints law, each super complainant could make a single complaint in any given year, and the regulator to which they complain would have a set time limit to investigate and respond publicly.

At a hearing of the Finance and Expenditure Select Committee, FinCap’s Jake Lilley pointed to the success of super complaints in the UK.

Kiwibank chief economist Jarrod Kerr has said it reflects two different economies, one rocketing and one fizzing.

“Tens of billions of pounds have been refunded in the United Kingdom for mis-sold insurances,” he said. “That all started with a super complaint in the early 2000s.”

Many of the refunds were for loan payment protection insurance, Lilley said.

Loan repayment insurance, including credit card repayment insurance, is a low-value form of insurance that banks used to sell here but quietly withdrew from the market as criticism mounted, however loan repayment insurance related to car loans is still sold by non-banks.

“The Australian regulators started receiving designated complaints last year,” Lilley said.

MPs were told of continued problems with lower-tier lenders flouting responsible lending rules that are supposed to result in people only being granted loans they could afford to repay.

An informal form of super complaining has started to emerge in this country. Financial mentors launched a combined effort to get the Commerce Commission to investigate Australian-owned Go Car Finance, a car loan company, by gathering up what they claimed were instances of irresponsible lending by the company.

It ultimately led to Go Car Finance facing action from the commission and ceasing lending in New Zealand.

Lilley said a super complaint system would be an alternative to class action lawsuits.

Class actions were not a panacea, Lilley told MPs, and they relied on a profit motive to get off the ground, with the lawyers and litigation funders seeking a large slice of any compensation ordered.

“Not every single issue that needs good investigation, and that a regulator might not have been able to get on top of, will be profitable to pursue through a class action,’ he said.

Andrew Hubbard, deputy chief executive of Citizens Advice Bureau (CAB), expressed the frustration of debtor advocates with slow action by regulators to enforce the law.

“We regularly see the harm caused when robust consumer protections are lacking, or when there’s inadequate compliance and enforcement to give real effect to those protections,” he said.

Andrew Hubbard, deputy chief executive of Citizens Advice Bureau, says they regularly see the harm caused when robust consumer protections are lacking.

Hubbard told MPs about the “difficulty and slowness” of action being taken against lenders, and said it was important that regulators were adequately funded.

CAB, FinCap and Community Law Centres of Aotearoa want government funding to run what they called a Financial Legal Rights Service.

“This proposal has come out of a long-term concern about the level of harm being caused by problem debt,” Hubbard said.

The Government stands accused by several class action litigation funders of undermining class actions by moving to pass a law to protect ANZ and ASB from facing potentially large financial costs in a class action brought against them by thousands of borrowers.

Davey Salmon, senior counsel for the plaintiffs in the class action, called it “almost unprecedented to close down rights” in an ongoing case.

Class action lawyer Fionnghuala Cuncannon told MPs: “It was very important the committee understood that the bill as drafted will have a chilling effect on class actions and therefore access to justice in New Zealand.”