Consumer NZ rejects criticism of finance study

Photo / Richard Robinson

Consumer NZ will not be changing the way it carries out mystery shopping exercises on financial advisers despite a report commissioned by finance companies which heavily criticises its last research.

The report, by Associate Professor Michael Mintrom of Auckland University on behalf of two financial advice firms, claims last November's consumer study was "methodologically flawed" and had an "unethical" reporting approach.

The research mystery-shopped 33 financial advisers and after a review by an independent panel found much of the advice was poor, did not meet the needs of the shopper or was given in a verbal format only.

Only three out of 17 plans produced were rated good by the panel - the rest were rated disappointing or rejected.

The report created an uproar in the financial advice community and two financial advisers, whose firms were surveyed in the research and did poorly, had to resign from the financial adviser code committee.

Two firms criticised, Plan B and Rutherford Rede, commissioned Mintrom to do the report.

Mintrom claims the Consumer project did not learn from previous studies on financial advisers, did not consult its expert panel when setting up the study and raised questions about the independence of one panel member.

The fact that only 17 out of 33 plans could be reviewed suggested poor project management and the diversity of the mystery shoppers was likely to have affected the quality of the advisory sessions, Mintrom said.

But Consumer NZ chief executive Sue Chetwin said Mintrom's report was "riddled with errors".

"We used international best practice. We used an independent panel - they came to independent decisions."

While there was always room for improvement in any research Chetwin said the organisation was completely comfortable with it.

Mintrom's report found that four of the 11 mystery shoppers used the products of one of the firms which supplied a person for the independent panel.

Chetwin said the four shoppers were members of Gareth Morgan's KiwiSaver scheme.

But she did not believe that should have ruled the shoppers out because the shopping was about financial advice, not KiwiSaver.

Chetwin said Consumer NZ would be undertaking another mystery shop at the end of next year once new legislation governing advisers had been bedded in.