The Financial Markets Authority's draft guidance on the controversial issue has been cautiously welcomed by the Institute of Financial Advisers, which pointed out potential difficulties for RFAs selling KiwiSaver.

Good Returns spoke to an RFA, who didn't want to be named criticising the FMA, who said there was an element of "scaremongering" involved in the exercise.

"They [FMA] have to cover their arses so you don't get dumb brokers talking nonsense," the broker said.  "They're trying to scare the crap out of everybody and they've done a good job.

"They're going to find some RFA who has done a KiwiSaver and they are going to be in s***... this scaremongering is nonsense."

The adviser said the focus should be on what bank tellers are saying to customers, as well as what employees are being told by their employers.

"It's unbelievable that they don't target what HR people are telling employees; if the average HR person is giving KiwiSaver information how do you know they aren't giving advice?

"The amount of KiwiSaver brokers do is minimal compared to the rest of the market."

However, he said there was just as much risk associated with disgruntled clients as there was with running foul of the regulator.

"You're always going to get one client who has a fund that doesn't do very well and says 'the broker told me to do it'... the liability people have to step in and I have to get myself a lawyer.

"I'm going to have to pay a load of money for KiwiSaver that I got $40 on."

The FMA couldn't be immediately reached for comment.