As Australia looks for ways to loosen up its notoriously stringent financial services regulations and cut compliance complication and costs, New Zealand is putting in place the sort of legislation many Australian financial services providers wish they'd been given in the first place.

Even as the HIH drama unfolded and the new Financial Services Reform Act (FSRA) came into force in Australia, NZ continued to enjoy a "light-touch" regulatory regime that required little of the industry and provided limited overview of industry activities.

But though the Kiwis may have thought they didn't need to get into lockstep with the legislative wave sweeping through much of the developed world, international pressure made continued resistance impossible.

NZ is now being forced to join the international drive for consumer-friendly rules that also increase the professionalism of intermediaries and the standards maintained by insurance companies, banks, life insurers, etc. It has little choice but to get into line.

A Government review, the Review of Financial Products and Providers, was largely brought about by subtle pressure from Australia and major international organisations like the World Bank and the International Monetary Fund.

As Insurance Council of NZ CEO Chris Ryan says, the international critics "believed that light-handed regulation was out of step with moves around the world to increase regulation in an increasingly globalised economy".

The NZ Government's review was set in place last year to lift the regulatory standards of NZ, increase the confidence of international investors and empower local consumers of financial products.

The timeframe for implementation and completion of the legislative program reaches as far forward as 2012. Mr Ryan told insuranceNEWS.com.au on Friday the NZ approach has focused on raising standards by lifting the demands set by regulation - "but not lifting them to an unsustainable level, or lifting them to some of the more high-compliance levels of the Australian jurisdiction".

Four key bills impact on the insurance industry - the Financial Service Providers (Registration and Dispute Resolution) Bill; the Financial Advisers Bill; the Insurance Prudential Supervision Bill; and the Insurance Market Conduct Bill contain all the detail of the reforms.

The legislation seeks to register all financial services providers, to require minimum qualifications for all financial advisers, to specify prudential supervision under the Reserve Bank and Securities Commission and to amend and control market conduct and contracts within the industry.

While generally supportive of the legislation, the NZIC is wary of the devil in the detail, and very aware that the legislation is more clearly focused on the investment end of financial services - a problem their Australian counterparts faced.

"I'm concerned that this is seen as a finance regulatory change without adequate recognition being provided to the insurance segment of it," Mr Ryan said.

Nor is there total ease with the fact that - like the FSRA - "the really critical details of the legislation will be applied under regulatory methods. It is within the regulation, and particularly the co-regulatory component of it, that we must be very vigilant."