Weatherston, who runs his own Auckland financial advisory firm - Financial Focus, told Good Returns the swag of recent government regulatory proposals for the industry appeared to place a heavy compliance burden on individual advisers.

"The probability that [the government] would take a sledgehammer approach to regulating advisers is increasing," he said.

Weatherston said if the cost of compliance under the coming regime was too high sole practitioners would be forced into the arms of institutional businesses, reducing consumer access to independent advice.

However, Angus Dale-Jones, Securities Commission director supervision, said it was "premature" to say how the advisory industry would be affected by regulation, given that much of it remained to be written.

"Until the Code Committee is formed and they write the rules around the advice process no-one can really say how great the change [to the industry] will be," he said.

It is understood the members of the Code Committee will be announced within days.

Dale-Jones said while advisers understandably were becoming more anxious as further details of the regulatory proposals were released, the legislation was not intended as a draconian crackdown on the industry.

"This is not a piece of financial services industry regulation," he said. "But it's about registering and authorising professionals; it's about the human qualities that those professionals who are interacting with clients need."

The government is currently compiling feedback to three papers regarding the regulation of the advisory industry: two from the Securities Commission - one dealing with competence and the other on regulating and supervising advisers, and; another discussion document authored by the Ministry of Economic Development (MED) outlining disclosure proposals.

Dale-Jones said about 70 responses had been received on the competence paper, which has now closed for submissions. Interested parties have until July 30 to respond to the commission's 'Staff paper on regulating and supervising financial advisers' while submissions close for the MED disclosure paper on August 12.