The report was compiled from an anonymous online survey conducted in September that was completed by more than 900 of the roughly 2000 AFAs nationwide.

It found only a third of AFAs (35%) thought public confidence in the professionalism and integrity of financial advisers had improved over the past 12 months, while more than half (57%) thought confidence hadn’t changed and 7% believed it had reduced.

Recent court cases and FMA activity against “bad eggs”, along with greater awareness of the need for financial advisers to be qualified, were cited as reasons for public confidence increasing.

Those who thought confidence hadn’t increased felt the publicity about prosecutions against the “bad eggs” hadn’t been counterbalanced by coverage of the good work of most advisers.

The survey also found 61% of AFAs had made fundamental changes to their service offering as a result of the regulations, the most common change (43%) being that they no longer target a broad base of clients but instead focus on a specific niche.

One adviser said his customer base had been segmented due to the increased compliance costs: “Lower value clients have a more cost effective offering with less direct access to a named advisor - they deal with a phone based advisor team.”

The FMA said it would be “concerned if AFAs respond to regulations and new professional obligations by effectively limiting access to personalised advice.”

It said it would look at whether changes to regulations had driven changes to remuneration practices, such as whether AFAs had successfully switched to fee for service models; the survey showed commission is still the main remuneration method for AFAs.

Overall AFAs were happy with the Code, although uncertainty about some aspects had led to an increase in paperwork to “cover all the bases”.

However, they weren’t happy with the disclosure regime and questioned its usefulness to clients and the necessity of the two-staged disclosure; there was also the perception of an uneven playing field with the “lighter” registered financial adviser (RFA) disclosures.

There was general unhappiness with the tiered regime – many AFAs think RFAs ‘get off too lightly’, are not well qualified and are subject to a disproportionately lighter regime in some cases, for providing advice on the same products and are therefore a major risk to investors.