A KiwiSaver provider took more than 30 working days to process a woman's hardship withdrawal, prompting a disputes tribunal to order $500 compensation for the stress caused.
A KiwiSaver provider has been ordered to pay $500 in compensation after a disputes resolution service found it unreasonably delayed processing a member's application for financial hardship withdrawal — even though the provider had not formally breached its own timeframes.
The woman applied in September for $22,000 to cover essential living costs and rent arrears. She was approved for the living costs portion later that month but was then asked for additional information about her rental situation — a request that added 13 working days to the process. Her rental arrears payment was approved in early October and she received the money five days later.
In total, more than 30 working days passed between her initial application and receiving the full amount. She told Financial Services Complaints Ltd (FSCL) the delay caused her to fall further behind on rent, face potential landlord enforcement action, and experience significant stress.
The provider told FSCL it had acted within its own processing timeframes. FSCL acknowledged the formal timeframe was not technically breached, but found the conduct unreasonable given the circumstances.
"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," FSCL said in its published case note.
It also noted the provider treated information about the rental arrears as a fresh reassessment, requiring the woman to wait an additional eight working days — a step FSCL said should not have been necessary given the provider was already familiar with her situation.
Hardship withdrawals are rising
The case comes as the number of KiwiSaver members withdrawing savings on hardship grounds has grown. In April 2026, 4410 members withdrew a total of $38.5 million due to financial hardship, up from 4220 members in April 2025, as RNZ reported.
That trend suggests financial pressure on households remains elevated, with more people turning to their retirement savings as a last resort. Housing market uncertainty is also weighing on sentiment, with REINZ data showing another flat month for sales in June 2026, per RNZ's housing market report.
How the disputes process works
FSCL is one of several external dispute resolution schemes authorised by the Financial Markets Authority to handle complaints about financial services providers. Its decisions are not legally binding in the same way as court rulings, but the practical effect is that members who have exhausted a provider's internal complaints process can escalate to FSCL at no cost.
The $500 award was for non-financial loss — the stress and inconvenience caused by the delay — rather than for any financial shortfall. The case illustrates that even when a provider stays within its own stated timeframes, the disputes process can find the conduct unreasonable.
Members going through a similar situation should be aware that they can complain to FSCL or Financial Dispute Resolution Service if they believe a provider has handled their hardship application unfairly. Documentation of delays, written communications, and evidence of financial impact all strengthen a complaint.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.