The issue is in the spotlight because the Financial Markets Authority is looking at the processes of risk advisers who have high rates of replacement business.

It will look to determine whether the advice given to clients was acceptable.

But unlike AFAs, who have a six-step process to follow, RFAs have so far not had a set framework they must comply with when offering advice. They do not have the same requirement to document their recommendations.

That has left some wondering what benchmark the FMA will consider as “good” advice.

Barry Read, of compliance firm IDS, said the only requirement in legislation or regulation for RFAs was that the advice they gave was given with care, diligence and skill.

"The parts of the code that apply to AFAs, giving advice in writing, keeping records, client suitability, they don't directly apply to RFAs. The client-first obligation doesn't apply to RFAs, either."

He said some non-AFA advisers could be left worried about how to navigate the "grey area".

An FMA spokeswoman said it provided information that stated what is expected of RFAs   -  that they must exercise the care, diligence and skill that a reasonable financial adviser would exercise in the same circumstances. “This is the main criteria for determining what good practices are for a RFA but is certainly not all.”

She said other general requirements would include assessing the product’s suitability for the client’s needs, explaining the key features and any limitations of the product, clearly articulating any limitations on the service being provided, acting with care, diligence and skill, not engaging in misleading or deceptive conduct, ensuring advertisements are not misleading, deceptive or confusing, and complying with disclosure obligations.

The FMA also offers more specific examples of what might be expected when dealing with insurance replacement, including an expectation that key exclusions and limitations in the product would be highlighted.

Read said most of the advisers he dealt with kept good written records to show they had met these obligations. But other sources said not all RFAs would be in that position.

Industry commentator David Whyte said it seemed inevitable that when the new Financial Advisers Act came into force, all advisers would have to follow some sort of set process, in the same way AFAs currently do.

“Whether they want to be a financial adviser or work as an agent, either way they are going to have to meet an as-yet undefined standard of conduct, process and behaviour, whether that’s the six-step process or something a little more succinct, they’re going to have to have something, I don’t think they’ve got any choice.”

Financial advice firms would have to be able to show the FMA their agents were following an acceptable process, and financial advisers would have that obligation as a matter of course, he said.

“I don’t see any way around it. You’ve got to be able to display to the regulator on request.”