Kiwisaver fund sellers have until March 1 to implement new guidelines requiring extra care when luring new members or switching people over from other funds.

In a move that has "dumbfounded" the banking industry, final rules issued by the Financial Markets Authority draw strict boundaries around giving out KiwiSaver advice.

They could see providers pinged if bank tellers, mortgage brokers, insurance brokers or others implicitly advise people to switch schemes without following proper processes.

Sales staff and financial advisers who imply someone would be better off in a different scheme will have to give a clear disclaimer that they have not weighed up the merits of switching, and explain the potential downsides of changing schemes.

And companies that sell KiwiSaver funds through third-party brokers will have to take reasonable steps to ensure that any new members they get through their distribution channels know exactly what they are joining.

The regulator resisted some funds' industry submissions to water down aspects of the guidance, saying it would be keeping a closer eye on the way companies switch people between schemes and funds types as new sign-ups slow.

Bankers Association chief Kirk Hope said the changes went too far and would make it harder for people to get information about KiwiSaver.

"It looks like the FMA has ignored extensive legal advice provided through submissions. They are reinterpreting the law. It's clearly not what Parliament intended," he said.

Under the new guidance only very basic information can be provided about KiwiSaver without being deemed to be providing financial advice - for example, a bank teller answering a customer's question about fees associated with the bank's scheme.

The FMA said it was likely it would think someone had given financial advice if they initiated a detailed conversation with a client about the scheme and that would impose the special care obligations and entitle the client to access a dispute resolution scheme.

Depending on the circumstances, advice can be either class advice or personalised advice, which can only be given by authorised financial advisers and trained people working at specially listed entities, including banks.

Advisers such as mortgage and insurance brokers can provide generic advice and take people through questionnaires designed to find out their risk profile without providing personalised advice, the FMA said.

"Beyond this, applying the factors outlined in this guidance note, FMA is likely to conclude the advice service is personalised," the guidance says.

Once an adviser or salesperson discusses someone's financial circumstances and recommends an appropriate investment, they cross into personalised advice.

An example in the guidance explains that someone who is already in KiwiSaver, who walks into a bank to talk about changing their insurance, would be given class advice if the in-house adviser asked if they were interested in joining the bank's Kiwisaver scheme and explained the benefits of the bank's product.

If they went further and suggested the bank scheme was better for the person than their existing scheme, that was probably personalised advice.

- © Fairfax NZ News