Don't blame us: Consumer
Consumer chief executive Sue Chetwin has hit back at an independent report criticising the institutions mystery shop of financial advisers.
Friday, June 18th 2010, 7:20AM 
2 Comments
by Jenha White
Chetwin says the report, commissioned by two financial advisory firms rejected in the mystery shop and written by research method expert Michael Mintrom, is riddled with factual errors.
"He [Mintrom] accuses Consumer of doing harm to the financial adviser industry, but the industry didn't need us to do that.
"Years of consumer detriment at the hands of financial advisers has seen the industry now being subject to regulation," she says.
According to Mintrom the Consumer study was motivated by good intentions but the quality of the study was poor, especially when judged by the number of cases involved (33), the high rate of attrition of cases during the study (16), the lack of screening and training of the mystery shoppers and the naming and shaming approach.
Chetwin says the research was qualitative and the 33 cases involved were to be a window into the industry.
"We don't believe that if we had broadened the study the findings would have been significantly different."
Chetwin also believes Mintrom is wrong to suggest that having around half of the mystery shops uncompleted was poor management on Consumer's part.
She says prior to the mystery shopping, anonymous enquiries were made of firms in the survey to ensure they offered financial planning services to people with a variety of needs.
"In claiming our project management was poor because several mystery shops did not complete, or resulted only in oral advice, Mintrom fails to consider these were failings of the firms- that what was promised was not delivered in practice because of a lack of knowledge, poor communication, product limitations or other process weaknesses within the firms themselves," she says.
The Consumer study had eleven mystery shoppers ranging in age from their mid-30s to just over 80 that visited financial planners and they were "real people with real financial questions".
Mintrom believes this was a fundamental problem of the study because hardly any effort was made to control the character profiles and test scenarios and as a result, the quality of the advisory sessions would have been influenced in unknown ways by the knowledge and behaviours of the mystery shoppers.
However, Chetwin disagrees saying considerable time was spent investigating the internationally accepted ethical standards adopted by research organisations engaging in mystery shopping which were instrumental in Consumer's project design.
"This included influencing how we engaged with the members of the public who volunteered to document their experience for us and how we communicated to the community at large that we were undertaking mystery shopping.
"We used real people with real situations, you can't get better than that," she says.
Mintrom was also concerned about Consumer's use of the naming and shaming approach, a strategy he believes should be avoided unless there is high quality and robust evidence, which is hard to obtain.
"If you want to engage in naming and shaming, you have to be dead sure you are correct in the claim that a company is not giving good advice," he says.
However Chetwin says Consumer stands by its report and what it did.
"We talked about firms and not individuals in naming and shaming," she says.
Even so, the study resulted in two members of the Code Committee resigning, including Liz Koh the sole adviser of Moneymax.
Mintrom believes Chetwin has adopted a tone of moral superiority in her response to the report.
"Sadly, Chetwin cannot see that the reputation of her own advice-giving service has been badly damaged.
"She has allowed the frivolous wastage of taxpayer money on methodologically shoddy research and unethical reporting. She has been disrespectful to her subscriber base."
Mintrom says he has called for more research on customer experience of financial advice services in New Zealand.
"That research must be done by credible research organisations. We now know Consumer NZ lacks both the capability and integrity to perform such research."
To read the Good Returns story Consumer responded to click here.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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Comments from our readers
Surely there can be any number of reasons why the mystery shop didnt complete. It looks like Consumer expect you to take their word for granted that 100% of those cases was due to the firm failing in their duty of care.
Without any details though, I am not sure anyone could fairly infer that the lack of a result is evidence of poor advice. Consumers response, that no result equals a negative result, may paint a better picture about their own prior biases and draw their own conclusions about how those biases in turn affected their investigation.
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Despite the stubborn and gallant defence of the indefensible by Sue Chetwin, I have to conclude that in this instance, consumer interests have not been well served.