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As part of the Financial Services Legislation Amendment Bill, the possible penalties that can be levied on financial advisers are being brought in line with the rest of the Financial Markets Conduct Act.
Financial services lawyer David Ireland said, as a general rule, under the Financial Advisers Act (FAA), the penalty for "serious" breaches worked out at $100,000 for an individual and $300,000 for an entity.
He said, for many situations, the maximum potential penalty had doubled.
"Plus there's a wider range of enforcement powers and some very significant increases in potential penalties for breaches that are seen as the most serious."
Under the FAA, authorised financial advisers who breached their code of conduct duties would face the Financial Advisers Disciplinary Committee, which could recommend cancellation or suspension of authorisation, censure, supervision or further training and a fine up to $10,000.
Under the FMCA, an individual who breaches their legal duties can face a penalty up to $200,000, and a financial advice provider $600,000.
The new rules also bring in the possibility of jail time for disclosure breaches.
Those who held out that they were able to provide a service they could not could be fined up to $10,000 for an individual under the old rules - now that has increased to $200,000 for an individual.
"It's quite a big jump." Ireland said. "They are the maximum penalties for the most egregious conduct. It gives a signal as to the degree of seriousness of particular offences."
But he said advisers would already have been trying not to commit the offences under the previous regime, so there should be little impact in reality.
Adviser Simon Hassan said penalties were an expected part of any regime, to "keep people on the straight and narrow. In principle they are needed". He said smaller, less well-resourced firms would worry if they were not being applied proportionately.
Another adviser, Brent Sheather, said the penalties would be enough to put a small advice firm out of business. "Probably meaningless too, if the financial advice provider is a corporate with limited liability. Easier to say 'we are bankrupt' and walk away."
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