Chris Lee is one of those characters many in the industry love to hate. However our survey of advisers show that many follow his research and comments on finance companies.

I find it is useful to observe his comments. Some seem good, but others I can’t agree with.

In saying that I fully support comments in yesterday’s newsletter re Interest’s SQP scoring system. Regular readers will know that I have never been a fan of this system. I would go so far as to say it is one of the most irresponsible things I have seen in the financial services industry in my 20-plus years covering it.

And no my comments are not personal, nor sour grapes. I just think it is an incredibly shallow, misleading and useless tool. I know people have taken the rankings to be ratings and made investment decisions based on that information – and lost money.

What was pleasing in our survey was that it appears very few advisers take notice of SQP. Rather their emphasis is on the big international companies; Standard and Poor’s and Fitch.

The rating question is becoming a bit of a vexed one as it appears the Ministry of Economic Development is hell-bent on only allowing the big international agencies be the providers when mandatory ratings of finance companies come into effect.

There is absolutely no doubt they have the skills and experience, but I do wonder whether some of the smaller, more local organisations like Bondwatch and Axis, should be considered. Neither of these are perfect, but I am sure they could develop and be refined. One thing I like about Bondwatch is that it covers a good proportion of the market and it tends to pick up trends. Axis rates fewer companies and potentially it drawback seems to be that its ratings appear a little generous.

Recently I listened to Marac’s Brian Jolliffe and he expressed concerns about some of the raters, particularly that they were making their decisions on old historical information and without talking to the companies.

They are good points and I would like to see a good local rating company, which was “kicking the tyres” of the companies and providing reports. At the moment much of the rating information is just a rating and no reports. While S&P comes out has the most popular in our survey, it only rates a handful of companies (UDC, Marac, South Canterbury, Geneva and the banks) and I very much doubt anyone has read their rating reports.