Half of insurance advisors are not meeting their obligations to clients, and they have been put on notice after a review by a financial watchdog.
Legislation compels financial advisors to act in the best interests of their clients at all times.
But a recent review of 24 advisors by the Financial Markets Authority found 12 were either in breach, or unaware, of their obligations.
The review criticised the industry's business model, in which advisors are rewarded with commissions and other incentives for selling clients new policies, or changing their existing policies.
More than half the advisors failed to appreciate that this brought about a conflict of interest.
The authority's director of regulation, Liam Mason, said that was worrying.
"The distribution model ... has very high upfront commissions which incentivise advice to change - to move insurance policies, as opposed to perhaps incentivising ongoing maintenance and care of the client.
"It's very hard to manage a conflict of interest if you don't see it in the first place", he said.
The review also found many advisors kept below-par records of the advice they offered clients over time - which was worrying, as making previous advice available helped clients make informed decisions.
Currently there are two different categories of financial advisor - registered financial advisors (RFAs), and authorised financial advisors (AFAs).
While both are bound to serve clients by legislation, AFAs must abide by a code of conduct, while RFAs don't have to meet the same standard.
Currently legislation is before parliament which would raise the bar for RFAs.
And Mr Mason said the review's results support that idea.
"We saw quite a bit of difference between RFAs who don't have to get a licence ... versus the AFAs who do. That tells us that getting rid of that distinction and bringing in consistent standards for all advisers is a good idea."
While four RFAs were warned about their conduct, there will be no penalties for the advisors at this stage, as this was the first review of its type.
But Mr Mason said the unflattering results meant there would be closer scrutiny in the future.
"There's nothing we've seen that makes us more comfortable, so we will be keeping some pressure on here.
"And in the future the Financial Markets Authority can give formal directions to financial advisors ... and we could, of course, ultimately make public warnings."