Photo: RNZ / Quin Tauetau
It was unreasonable for a KiwiSaver provider to take 30 working days to process a withdrawal request for someone in serious financial hardship, a disputes resolution service says.
The woman complained to Financial Services Complaints Ltd, one of the external dispute resolution schemes that deal with complaints about financial services providers.
She thought her KiwiSaver provider had mishandled her application.
She applied in September for $22,000 to pay for essential living costs and to cover her rent arrears.
Late that month, she was approved for essential living costs but was asked for more information about her rent arrears.
The application for a payment for her rental arrears was approved in early October and she received the money five days later.
She told Financial Services Complaints Ltd that it took more than 30 working days for her rent arrears to be paid, and the arrears should have been included in the original timeline for processing the application.
She said she fell further behind on her rent and faced potential enforcement action from her landlord, which increased her stress.
The provider said it acted within its processes and required timeframes, and had assessed the application promptly.
FSCL said it acknowledged the provider had processed the application within its timeframes, but said its concern was with the reasonableness of the process.
“Sixteen working days had passed between [her] application and partial approval of her hardship request, which was within the provider’s timeframe. However, the provider took 13 working days to ask [her] for her bank information. Given that [her] application was for significant financial hardship, we considered this delay unreasonable,” it said in a case note.
“As the provider treated [her] information about her rental situation as a reassessment, she had to wait an extra eight working days. Given that the provider was familiar with [her] situation, we thought that it should not have required much time to assess [her] rental information.”
It said the provider should pay her $500 as compensation for non-financial loss, based on the stress and inconvenience she experienced.
The number of applications for withdrawal on the basis of financial hardship has increased a lot in recent years. In April, 4410 members withdrew their savings due to financial hardship, up from 4220 in April last year. The withdrawal was worth $38.5 million.
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