The Government is backing a proposal for a commissioner to develop a code of conduct and set up a disciplinary body for finance advisers and institutions.
A select committee considering legislation to regulate the industry made the recommendation in an interim report.
Commerce Minister Lianne Dalziel said the approach would give strong central supervision while using the experience and knowledge of industry participants.
"It will help ensure that the Securities Commission can act as both the statutory enforcer and the professional regulator."
The committee also suggested a two-level approach to imposing obligations on financial advisers depending on the complexity of the financial product involved.
"The industry and officials have been grappling with the problem of defining who should be captured by the new rules regulating financial advisers. By focusing on the actual product rather than financial decisions or occupations we are able to provide certainty about who is covered by the bill."
Category 1 would include advice on complex securities or investment and savings planning. Anyone providing category 1 advice woul have to be individually authorised by the Securities Commission.
Category 2 would cover advice on credit, general insurance or simple securities such as bank term deposits or call accounts. Individuals would not need to be individually authorised to provide these services.
In addition, the committee is considering adopting a model whereby the Securities Commission can certify financial institutions which meet the standards under the bill.
Certified Financial Institutions would then be responsible for financial advice offered by their staff on simple products.
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