Commerce Commission asks Consumer for information
The Commerce Commission may take a look at the financial services industry following Consumer Magazine’s Savings Scandal feature.
Wednesday, June 2nd 2004, 7:04AM
The magazine concluded investors would have been better to put the money on term deposit.
The Commission has signalled an interest in the issue, although it is not launching a full investigation - yet.
“We’ve invited Consumer to pass on their research,” commission spokeswoman Jackie Maitland told Good Returns.
Commission executives will meet with Consumer within the next week and will decide whether there are grounds for action under the Fair Trading Act.
The magazine – which is the publishing arm of the Consumers’ Institute – claimed that the level of fees, and they way they are collected, is the cause of the poor returns, rather than a bear market.
Consumer’s claims have been criticised by the financial services industry. Some have pointed out that the period saw the worst bear market since the 1930s, and they have suggested that this may have something to do with the disappointing returns.
They also point out that if the time frame is changed only by a year or two the result is quite different And the research house that supplied the figures upon which Consumer based its article has criticised the use to which its figures were put.
FundSource executive chairman David van Schaardenburg has stated the survey’s sample size is small and unrepresentative.
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