Peden, CNZ's former sprint coach, quit in 2018 after a raft of damning allegations - including a culture of drinking and a lack of accountability within the organisation.
"This is an extremely sensitive situation for parents and athletes. They need a totally independent voice that is professional and competent," Nichol said.
"This is just the system reviewing the system and we have seen in other sports, like hockey, it just doesn't work."
Nichol said they could have good people working on any investigation, but the "outcomes were always mitigated" against by the process.
"We're cautioning parents and athletes against using it because we have used it and it doesn't work.
"Once again we find ourselves in a situation where the system is reviewing itself."
Nichol said the gymnastics situation was incredibly delicate and needed oversight that was totally independent.
In response, Miskimmin insisted that the system was both independent and professional.
"I'm confused by those comments because that is exactly in our minds what we've put in place to help gymnastics," Miskimmin said. "It is completely independent, we may fund it, but that's as far as our relationship goes.
"This is a time where we want to bring confidence into the system. He asked for independence, it is independent. He asked for professional, this is a professional group of people who are currently doing it not only for us now, but have been doing it for New Zealand Rugby for some time and successfully.
"We have confidence in it and everyone else should."