A quarter of the financial advice firms the Financial Markets Authority (FMA) checked did not explain their fees clearly, according to a disclosure review published on 6 November.
The review also covered managed investment schemes and discretionary investment management services. The advice providers are the ones who explain commissions to households, and the report doesn't mention insurance by name.
The FMA looked at "a sample of" advice providers, using on-site checks of client files and desk-based reviews of their disclosure. It didn't say how many firms that was, or name any.
Overall it found disclosure "generally satisfactory", with most issues "relatively minor". In 25% of advice providers, fee disclosure lacked "sufficient clarity, completeness or consistency".
In 20%, record keeping was "insufficient to substantiate the basis or rationale for fees charged". In 15%, fees, incentives and commissions were "not disclosed proactively or at the appropriate time". About 10% presented disclosure in "a less user-friendly or comprehensible manner".
One example in the 25% group matters to anyone with a life or health policy. The fee range was disclosed "without explaining how the applicable fee would be determined or calculated, such as the amount payable for a policy cancellation within a certain period (also known as a clawback)".
A clawback is money an adviser can have to give back if a policy is cancelled soon after it starts.
For fees that may be charged "if advice did not proceed", some firms stated only the maximum, with no explanation of when it would apply. In other cases, "the actual fee charged exceeded the maximum fee disclosed to clients, but no clear explanation was provided".
On timing, some firms did not give fee information "at the time advice was given", or put fees in a product document without discussing them with the client. Upfront commission information was "disclosed separately from other fee information".
The FMA recommends advisers "proactively discuss fees, commissions and incentives with clients rather than relying solely on the client reading the written disclosure".
It says commissions can be shown as a percentage or a dollar figure, but adds that "we consider disclosure in dollar terms to be good practice to assist with investors readily understanding what the adviser will get out of the advice process."
The FMA has given feedback to the firms involved. It says "some" have fixed their disclosure and that it will carry out "targeted follow-up reviews" on the rest, according to its media release.
It lists managing conflicts from how advisers are paid as a regulatory priority for 2026/27. The report doesn't say any adviser acted wrongly in a way that harmed a client.
