An IFSO case where an adviser was fined $1000 for his treatment of a client has caused consternation in the industry.

The adviser signed the client up to a superannuation plan with life insurance more than 20 years ago.

He then had no contact with the client, who moved to Australia. In 2011, the man and his wife tried to get in touch again but the adviser had retired, though he was still getting a trail commission.

IFSO said the case was primarily about the ongoing obligations, and the adviser’s response when his clients asked for assistance after 2013. It said he had not served them sufficiently.

“A servicing commission, in respect of a client, is a payment for a service to that client, usually with ongoing obligations," IFSO deputy ombudsman Louise Peters said.

But advisers said that was not necessarily the case.

Jon-Paul Hale said the trail component was just a facet of the original advice contract.The fact of commission being paid annually did not in itself. indicate any expectation on the adviser, he said.

Some companies would pay an ongoing servicing commission, others would see it as just a part of their initial commission payment, which was to remunerate the adviser for having providing the insurer with a longstanding client.

Adviser Murray Weatherston said advisers had a contractual relationship with the insurer, not the client.

"My guess is that in other than investment cases, there is actually no contractual relationship between the client and the adviser ab initio.  If the client goes back to the adviser, and the adviser accepts the client for a new interaction, there will be a relationship.

"But I fail to see that an adviser who writes business for a client in 1993 and has no contract with the client to provide ongoing service and advice should be held accountable 10, 20, 25 years later."

Partners Life managing director Naomi Ballantyne said 30 per cent of any premium a client paid went to the cost of distribution, including adviser commission. Anything that was paid out as trail was "what's left of that 30%", rather than a specific payment for services.

She said clients were unlikely to know the details of whether their client was receiving trail commission.

But they would expect that if they had an adviser, that person would be there to advise them, and would keep up-to-date with any changes required through their lives.

"They would have a genuine complaint if the adviser never bothered to go back and see them again. It's not the renewal commission per se but an expectation that they should be able to expect their adviser will help them as their needs change over time."

She said with advisers, clients had a chance of regular reviews, whereas direct products were sold without follow-up.

"Is that what's meant to suit you for the rest of your life? Whether it's the adviser or the company, they ave an obligation to keep up-to-date with the client circumstances, not just the market."