The recently-released options paper for the review of the Act signals that the Ministry of Business, Innovation and Employment would like to see a move to an entity licensing regime similar to the approach of the Financial Markets Conduct Act.

That has prompted concern from those who fear it will mean more work for small adviser businesses.

Industry commentator David Whyte, former managing director of AIG Life Australia and general manager of AIA in New Zealand, said there did not seem to be many benefits for consumers or advisers in such a move.

He said some entities might not apply the rules to their members as strictly as others.

“Consumers could be exposed to risks they currently don’t face. This late addition of entity licensing at best dilutes the individual licensing regime, and at worst, creates more risk for the consumer than exists currently."

He said there were no benefits to the industry, either.

"If, as a practice owner, I have a team of AFAs – or qualified Financial Advisers post-FAA review – why would I seek a license for the practice and accept increased personal and professional liability?

"If one member of the team goes rogue – as has already happened in the dealer group licensing structure in Australia – then that individual bears the consequences. What is the commercial and/or consumer advantage to diluting the individual licensing regime?"

He said it would add another layer of regulation and expense to the industry without any benefit to consumers.

It was a case where New Zealand should not follow Australia’s lead, he said.

“There have been a number of cases in Australia where rogue advisers have been sheltered by the entity licensing regime.”

Whyte said the QFE structure worked for product salespeople but not financial advisers.

"There's nothing inappropriate about that, their function is to sell products. But advisers’ function is to advise."

He said the move would do nothing to boost consumers’ opinion of financial advisers.