A recurring theme at the Financial Services Council conference was that companies need to "scrub" their products and services.

Financial Markets Authority chief executive Rob Everett told delegates that the industry was at a crossroads.

"Public trust in financial services as a whole is at historic lows across the world. Here in New Zealand, the situation has generally been better but more recently public trust has been shaken."

He said reviews of the banking and life insurance sectors found "significant weaknesses" in the way institutions govern and manage conduct risks. He said changes needed to be made.

The regulators had put pressure on the banks to ditch internal sales incentives which were based on volume targets amid concerns they were driving poor outcomes for consumers.

When it comes to life insurance companies, Everett said: "I think it is fair to say we were not impressed."

"I know we now have the attention of the boards and management within that sector. Unfortunately, their previous lack of focus and resource on conduct and how to build organisations that serve the customers told us we should recommend to the Government that legislative intervention was required."

Everett said while its reviews did not find a widespread breach of the law or misconduct across the banking and life insurance sectors it had found processes and practices that were sloppy and were not adequately designed to look after customers.

"We saw insufficient focus on the risks posed to customers of poor behaviour whether by deliberate conduct or sloppiness."

"Good conduct is up to you – the industry – providers and advisers. Given what we've seen in other countries, I have to ask why you are waiting for us to come knocking – look at what we are saying, and think about how it applies to your business."