Yesterday Australia announced it will ban the use of commissions on investment products and soon after the Investment Savings and Insurance Association (ISI) announced plans to implement a voluntary policy to discontinue the payment of commissions on investment products, including KiwiSaver.

Power notes that banning commissions on the sale of financial products is gaining momentum internationally.

However, he says New Zealand is in the process of introducing a new regulatory framework for financial advisers, which would require full disclosure of commissions.

"I am confident that transparency of commissions, along with various other standards, will ensure mum and dad investors can make informed decisions about whether to use a particular financial adviser and will ensure that advisers act in their best interests.

"I would need to be convinced that the new financial advisers regime was not sufficiently addressing this issue before I considered banning commissions in New Zealand."

Power welcomes any voluntary move by the industry to improve incentives to act in the best interests of investors and says he will be monitoring the impact of the ISI's voluntary policy to discontinue the payment of commissions on investment products with interest.

"However, I currently have no plans to mirror this initiative in New Zealand law."

ISI chief executive Vance Arkinstall says the association has been concerned for some time now that commission payments are an arrangement between product providers and advisers with no input from the consumer.

He says the association wants to put the investor in a position of control and influence over the level of fees they pay for advice and how they pay for it.

"I think it's a good thing for industry to take the lead on this as it takes pressure off the government to regulate.

"If industry didn't take a voluntary approach then it would have been inevitable that government would in time have moved to ban commissions."

He says a wide number of people have responded directly to the ISI including a number of financial advisers with positive support for the initiative.

Arkinstall just regrets that the move by Australia forced the ISI to announce its plans earlier than expected. The ISI had been working on the voluntary policy since late last year.

"I would have preferred to engage with adviser groups beforehand for their input."

Institute of Financial Advisers president Lyn McMorran says the institute is supportive of ISI's initiative.

"The trend worldwide is to move to a fee-based model for investment advice and we will be looking to work with ISI and the product providers to determine ways in which our members can continue to be adequately rewarded and remunerated for the valuable work they do," she says.