He said “soft incentives” for financial advisers from product providers would eventually be banned in New Zealand, as they had been in other places around the world.

The Australian Securities and Investments Commission said in its report on the Future of Financial Advice legislation that soft incentives led to inappropriate behaviour from financial advisers. They are banned from July 1 this year although advisers will still be allowed to accept IT support and software, training and benefits worth less than A$300.

Britain will also ban them this year and Naylor said they had been identified by the United States Congressional committee as a key factor behind the heavy promotion of inappropriate debt products and a contributor to the global financial crisis. Bans were being discussed, he said.

Naylor said those three countries were New Zealand’s most important source of regulation ideas, so it seemed likely this country would follow suit.

“Most OECD countries are similar, and international regulation committees take bans on soft dollar as not even best practice, but as the lowest step. There is no good reason for soft incentives or other conflicted remuneration, unlike open commissions. So I can’t see them surviving once a review does take place.”

He said New Zealand stood out as an exemption internationally, giving the country a reputation of being “cowboy-ish”. Once the Government looked at investment commission, he could not see it also moving to ban soft incentives for insurance. “I imagine our reform will be based on the Australian blueprint, but less prescriptive.”