A mystery shopper exercise undertaken by Consumer NZ highlighted some serious deficiencies in the industry.
Consumer identified disclosure, competency and independence as three areas of significant concern in the financial adviser industry, he said.
"I have to say that the findings by Consumer are very much aligned to the anecdotal issues that continue to be raised with me.
"The new regime will improve the standard of disclosure currently made by advisers, and will ensure that more meaningful information is provided to consumers."
Although the Government's work would have an important impact on the finance sector, any significant change must be driven by the industry, Mr Power said.
Without an industry that was willing to reform itself, Government intervention would only be partly effective, he said.
Consumer chief executive Sue Chetwin said everyone knew consumers had received bad advice in the past.
"But we, like everyone else, hoped that had improved. The results shocked even us. This is an industry in serious need of reform."
Consumer mystery-shopped 33 financial advisers - from large institutions with in-house advisers and agents, sharebrokers and nationwide adviser chains to small standalone firms.
An expert panel assessed the quality of advice and information in the 17 plans it received.
Only three out of 17 advisers produced plans that were rated "good" by the expert panel.
The remaining 14 were rated as "disappointing", or they were rejected.
So many issues were found it was hard to know where to start, Ms Chetwin said.
There was poor analysis, unclear costs, advisers portraying themselves as independent when they were not, high costs and bad products.
Evidence that the analysis and advice was of a poor standard reflected badly on the competence of many practising advisers, she said.
"We're concerned that skill levels are low and will remain low, unless competency standards are included as part of the adviser authorisation process due to come into force next year."
Of the 17 plans received, 10 were investment plans and seven were comprehensive pre-retirement plans.
The shoppers looking for pre-retirement plans had, or were likely to soon have, significant mortgages, other debts, bank deposits and other investments.
Most were in KiwiSaver schemes.
They were looking for savings and expenditure budgets that would help them meet their short-term goals and eventually provide a nest-egg.
Some also needed advice about insurance, wills and enduring powers of attorney.
Ms Chetwin said that often, they were told to invest too much in managed funds at a time when it was likely the would also have a large mortgage.
Advisers did not receive commissions from providers for recommending debt-reduction strategies.
Shoppers were given conflicting information about service fees, and sometimes there was no information on costs.
In half the investment plans, fund-management fees were not adequately disclosed.
"Consumers need access to unbiased advice, but this won't become an industry norm until commissions are banned," Ms Chetwin said.
