The consultation paper was released last week. Committee chairman David Ireland said one of the areas that it was concerned with was conflict of interest.

Ireland said the committee did not feel it had the jurisdiction to directly attack conflicted remuneration but it was important to have a clear conflict of interest standard. “We need to clarify what we mean when we say ‘managing conflict of interest’.”

That would partly mean emphasising client first, he said, and clarify that it meant more than just disclosing remuneration. “Soft commission is still a conflict of interest. If I sell an insurance product and get an all-expenses-paid trip to the Gold Coast, I’m getting something out of it and I need to explain that to clients.”

Some commenters said the removal of incentives would be a step in the right direction towards financial advice being recognised as a profession.

But some advisers said it was unfair to pick on the soft commissions they received when other industries also often had bonuses thrown in.

Ginger Group regional manager David Pine said soft dollar incentives would always be a part of the financial services industry. “They are part of the normal course of business for insurance and investment companies. It is one of the ways in which these organisations promote themselves, and have done for about 30 years.”

He said some advisers did not accept them but those who did could still meet the standard of “client first”.

“Doing the right thing for our clients, and accepting soft dollar incentives, need not be mutually exclusive. This is the point that I feel the Code Committee needs to take on board. Their view seems to be that soft dollar incentives, if taken by the adviser, will automatically mean that the client is disadvantaged. In my view this is nonsense.”

He said doctors were often offered incentives by drug manufacturers but people still had faith in their GPs to do the right thing by them.  “I have complete faith in my GP's desire to do the right thing by me, whether or not he accepts soft dollar incentives. Personally I don't care if he accepts these incentives. I say good on him.  In the same way, there are a large number of high quality financial advisers in New Zealand who always do the right thing by their clients, and who sometimes accept soft dollar incentives.”

Pine said as long as incentives were declared by advisers, there should be no problem. “The Code Committee would in my view being doing a disservice to our profession if they sought to unduly interfere with the rights of these advisers.”