The FMA, which recently released draft guidance on KiwiSaver distribution, has also outlined its view on what advisers need to do to show care, diligence and skill when it comes to insurance, product replacement and debt consolidation advice.

It said that when giving personalised product replacement advice, advisers should make an "appropriate comparison" of the client's existing arrangements with the new recommended product.

This comparison will require knowledge of the terms of the client's existing product and should be "clear, reasonable and balanced", the FMA said.

"It should not just focus on the benefits of changing, for example, "the new product is cheaper". Highlighting only the benefits could be misleading."

However, if no comparison is made, the adviser should inform the client of the limited scope of the service, the FMA said.

"The adviser should explain that no comparison has been made, the types of adverse consequences which might occur as a result of changing products and that the specific consequences for the client have not been considered."

The FMA said that when considering whether suitable advice has been given on replacement insurance, it will consider the frequency with which an adviser recommends that a customer replace a product.

"For example, we might expect that one year policy will only be renewed or replaced annually, unless there is a significant change in the client's relevant circumstances."

It also said advisers "should keep records demonstrating how they have fulfilled the care, diligence and skill requirement in providing advice, and how they have disclosed and managed any conflicts of interest arising from commissions or their remuneration."