The need for public confidence in the current reforms was the reason behind the resignations of two code committee members, according to Commissioner for Financial Advisers Annabel Cotton.

Director of Moneymax Liz Koh and former head of wealth management at Westpac Patrick Middleton handed in their resignations after the recent Consumer magazine mystery shopper report “rejected” the advice given by both of these firms.

Cotton told Good Returns that she would not comment on survey, its quality or its findings, but said that the Financial Advisers Act’s “purpose is to encourage public confidence in the industry” and she “indicated to the members the risk of confidence in the code committee diminishing.”

“My concern was that there was a strong possibility, probability, that confidence would diminish somewhat in the committee,” Cotton said.

She stressed that Koh’s and Middleton’s resignations in no way reflected on their performance on the committee, and said they would not be replaced on the committee.

“The committee still has eight members and if they’re after more resourcing they will advise me,” she said. Cotton said she did not think the changes would impact on the committee’s timetable.

If a similar situation came up in the future, Cotton confirmed she would act in the same manner, saying the public must have confidence in the process.

Consumer NZ mystery-shopped 33 financial advisers and had an expert panel assess the quality of 17 investment plans, seven of which were pre-retirement plans. Only three were rated good by the panel, with the rest either disappointing or rejected.

Cotton was appointed as interim commissioner earlier this year as the government struggled to find an appropriate person to take on the role.

The commissioner oversees the drafting, approval and implementation of the professional code of conduct for advisers. The code will set minimum competency requirements.

Her successor, David Mayhew, will take up the position at the end of January. When the code is implemented, he will chair the disciplinary committee, which will hear complaints against advisers.

Earlier story WITH COMMENTS HERE