A report from the Inspector-General of Intelligence and Security has found the SIS acted unlawfully when officers issued a verbal warning to a person of interest two years ago.
The incident in July 2012 happened when the SIS searched a suspect's house, seizing a laptop and computer.
The report was carried out by former Inspector-General of Intelligence and Security Andrew McGechan who said the SIS officers had the appropriate search and seizure warrant.
However, he said the verbal warnings they gave to the occupants were not warranted.
The exact warning has been blanked-out in the report but relates to conveying 'a message from the New Zealand Government', about an unspecified plot.
Mr McGechan said the law allowed the SIS to collect intelligence - but not issue warnings. He said the officers didn't believe the warning was unlawful.
Prime Minister John Key said on Friday he thinks SIS officers should be allowed to issue verbal warnings and they should be appropriate.
"An SIS officer saying, 'I am from the SIS and you really should stop doing that' is appropriate, now the outgoing Inspector General has raised a question about whether that is lawful, and so we've actually ceased giving warnings at the moment."
Mr Key said he was seeking Crown Law's advice on the matter.
