Shanks fears the design of the new regulation could prevent smaller businesses from operating under their own FAP license.
She told TMM: "The intent of the legislation was New Zealanders could access a range of financial advice and advisers. We are concerned there are excellent non-qualified advisers who provide outstanding service to their clients and it maybe more difficult for them to operate their own FAP due to compliance costs.
"If they have their own FAP they will need to have processes and controls and competency to that of a Level 5 qualification if they do not choose to obtain the Level 5 qualification," she added.
Shanks fears advisers will face a real challenge "to absorb the additional costs for the processes and controls and competencies which will need to be shown". She added: "Consideration will be needed to understand the implications of compliance cost on small operators," she added.
The new regime will come into force over the next year, but many groups and advisers are uncertain about their setup and designation.
New Zealand's biggest group NZFSG, will become a FAP, with many members expected to become FAs underneath.
Brendon Smith, CEO of NZFSG, told TMM this week the new regime represents a chance for the sector to professionalise and will allow head groups to take a more central role with back office functions and compliance.
Smith said the group was happy to take on the compliance burden for members.
“We always felt taking a leadership role in terms of regulation and compliance was important to us,” Smith said. “That’s what we’d been trying to move towards anyway, and taking a license was a no-brainer and adds value to our members. It’s right for us and our members.”
NZFSG won't force its members to become FAs under the NZFSG FAP, Smith said.