Barry Read, of IDS, said despite the advent of regulation, there was no way for consumers to compare those offering services, whether it was investment, mortgage or risk advice. “If someone asked ‘how do I find a good adviser’, how do you answer that?”

He said the professional associations were not able to say with complete confidence that because someone was a member of their organisation, they were a reputable adviser.

“And it’s the same with the FMA. Just because someone is an RFA or an AFA, you don’t know whether they’re going to be good or not. You just know that they can meet a certain level and have good character.”

Consumers had to ask questions and shop around, which the FMA was encouraging them to do, he said.

Financial adviser Jeff Goldsworthy, of Goldsworthy Financial Solutions, said people searching for a financial adviser were in a similar position to those looking to sign up with a new GP. “How do they find one they get along with?”

Goldsworthy said the regulator could play a role in helping consumers to have more confidence, but still had too much work to do before it reached that stage. “The regulator is still donkey deep trying to figure out what it is doing now. The policemen are still working out what the people are doing in the street and then whether it’s right or wrong. They haven’t been able to establish what’s good standards and what’s not, because they’re still trying to determine what the standards are.”

PAA general manager Jenny Campbell said it was hard to say definitively how people would know a good adviser from bad. “But you can look at things like how long they have been around, their reputation and testimonials. Are people willing to put their necks on the line and say ‘this person is really good’?”

She said most advisers still found business by referral. Even an FMA approval process would not be the solution, she said.

“On any given day, the FMA could audit you and say ‘as of today, you’re giving good advice’ but it’s only a snapshot. You can’t rely on the regulator to give someone a tick.”

Read said calls for the regulator to take a more active approach were unrealistic – like asking police officers to name all the good drivers on the road, rather than catch the bad.