"The entire financial services industry needs to stop thinking about what the customer will pay for, and start thinking about what they actually need and what will actually will benefit them," she told delegates at the IFA conference in Auckland this week.

"Iin retail financial services there is a big difference between what people can be pursuaded they want and what they actually need."

She told advisers that the new regulatory environmnent will challenge all of you to do more than just the bare minimum; and if you do that you will be successful in the new regulatory environment."

Campbell said people who comply with the FMA and "play it straight", will see the good face of the regulator. Those who don't will see something quite different.

"If you are making good fatith attempts to reach good outcomes for markets and customers we will be both supportive and pragmatic. We will not be a regulator who applies regulation in a pedantic way. Something to be endured and chipped away at.

"We won't demand  things that aren't material. We will act where there are sound reasons to do so and in a manner that's proportionate to the risk as we percieve it. But we do expect you to play it straight.

"Those who put their interests first, who shrug in the face of harm to the market or who decide not to cooperate with us, or to cooperate gudgingly and defensively will see a very different face of FMA."

Campbell acknowledges there is some pain at the moment amongst financial advisers over regulation, but suggests some gains are emerging.

"We do appreciate that right now there is a point in time pain for broader gain. This pain might be being felt most accutely at this moment in time as a number of obligations coalese, but on balance the regulatory burden is about right.

"We are starting to see some results," she says. "We are starting to see green shoots of investor confidence which is encouraging for the advisor industry."

Campbell says that with  any significant regulatory changes there are going to be teething problems.

"We at FMA commit to work with you to find solutions to manage the issues in away that does not undermine th confidence we are seeking to build."