Terms of Reference changes 2024

We are notifying you of upcoming changes to our Terms of Reference (TOR), which come into effect on the 18 July 2024 (the 2024 Terms of Reference).

These changes have been made to the TOR by the Financial Service Providers (Rules for Approved Dispute Resolution Schemes) Regulations 2024 (SL 2024/31) Contents – New Zealand Legislation (the Regulations). Because these changes are being made by regulation, there will be no consultation on them; clause 18.1 b) of the Constitution simply requires us to notify you of these changes.

We incorporated many of these changes into our Terms of Reference as part of our update in 2023, however, there are further changes that will come into effect on 18 July 2024, as outlined below.

The key changes

1. The Applicable Monetary Limit for lump sums will increase from $350,000 to $500,000 + GST. This means we will be able to investigate complaints about insurance claims, credit and other financial services/ products up to $500,000 + GST.

2. The “special inconvenience” payment will now be called “special compensation” and it will now include:

1. non-financial losses including stress and humiliation; and
2. loss of opportunity

The amount that we can award for this increases from $5,000 to $10,000 + GST.

3. The discretionary period for considering complaints made after the standard 3-month deadline will be reduced from 12 months to 9 months after "deadlock”.

Notification of changes to the Applicable Monetary Limit for regular payments

In addition to the changes the Regulations make, we are notifying you that the Applicable Monetary Limit, which applies to claims made about products that provide for regular payments, will change from $2,625+ GST to $2,730+GST.

The TOR require the regular payment amount to be increased annually by the consumers price index (CPI). This year we have used the CPI to the end of March 2024, which was 4%.

When do the changes take effect?

The 2024 Terms of Reference come into effect on 18 July 2024.

Any complaints "deadlocked" before this date will be dealt with under the 2023 Terms of Reference (depending on the date of “deadlock”), and any complaints "deadlocked" on or after 18 July 2024 will be dealt with under the 2024 Terms of Reference.

Determining Applicable Monetary Limits for older complaints

The date that a complaint reaches “deadlock” is the date that determines which Applicable Monetary Limit applies. The date the IFSO Scheme is contacted about a complaint does not determine which Applicable Monetary Limit applies.

Applicable Monetary Limits:

1. For complaints “deadlocked” up to 17 July 2024: $350,000+GST for lump sums, $2,625+GST per week for regular payments.

1. For complaints “deadlocked” on or after 18 July 2024: $500,000+GST for lump sums, $2,730+GST per week for regular payments.

What you need to do: Checklist for Participants

Here’s what your business needs to do ahead of the upcoming changes:

• Identify internal and external documents that refer to the monetary limits and update.

• Review and update, if required:
  • internal process documents and training materials; and
  • templated complaint emails, letters and other documents.

• Implement a process for managing complaints during the transition period and apply the correct rules.

Documents

• 2024 Terms of Reference effective 18 July 2024
• Marked up copy of the changes to the Terms of Reference
• The Regulations

See here for details of the previous changes that were made to our Terms of Reference in 2023.

Explanatory webinar and slides

Slides - Changes to Terms of Reference 2024