November 05, 2009

A consumer watchdog has issued a scathing assessment of the financial advice industry after saying it has found evidence of widespread incompetence.Consumer New Zealand sent mystery shoppers to gather advice on investment and pre-retirement plans. Out of 17 plans, an expert review panel failed all but three of them.Consumer New Zealand chief executive Sue Chetwin says commission incentives were the reason why many of the advisers pushed particular products, without strong reasons for doing so. She is calling for a complete ban on such payments.

Ms Chetwin says that, in general, the advice was "scandalously poor" and the Government needs to do more to regulate the finance industry and protect investors.The panel found poor analysis, unclear and large costs, bad products and advisers portraying themselves as independent when they were clearly not, she says.The panel rejected as inadequate plans proposed by many major firms, including Westpac Bank, AMP, Money Managers and Rutherford Rede.