Police are appealing a High Court ruling that may call into question the legal basis for more than 20,000 formal written warnings issued over the last decade.
An organisation supporting children who have suffered sexual violence says the decision is putting the rights of offenders ahead of their victims.
Clinical psychologist Kathryn McPhillips, who heads HELP, the Auckland Sexual Abuse Help Foundation, said formal warnings had been a useful "work around" for police in cases where victims would not - or could not - press charges.
Fewer than 6 percent of cases were even reported to police and 1 percent resulted in a conviction, McPhillips said.
"We've got a dysfunctional justice system when it comes to sexual violence," she said.
"Often people are so traumatised by what's happened to them, they can't face any more trauma.
"So the warnings have been one option where those cases are stalled in the police process, and for us, have meant some very effective outcomes."
A teacher at the centre of the recent High Court case was an example of police's pragmatic approach, McPhillips said.
He received a formal warning after exchanging more than 1800 texts with a 15-year-old student in a 10-week period, telling her he loved her and giving her several gifts, despite her telling him repeatedly she did not want them.
"That is not somebody we want as a teacher of children or young people. So the fact he was no longer able to work as a teacher was a really good outcome that protected children in our society," McPhillips said.
The teacher admitted he had "probably overstepped boundaries" but denied any indecency. No charges were laid against the man.
He maintained his behaviour towards the student was that of a "protective Dad", and complained the formal written warning had made it impossible for him to find work as a teacher.
His lawyer, Warren Pyke, told the court that unlike pre-charge warnings for minor crimes - where the accused must admit wrong doing - there was no legal basis, policies or guidelines for police to give formal warnings.
In declaring the formal written warning to the teacher unlawful and ordering its removal from the police database, Justice Paul Davison said police were acting like judge and jury in determining criminal offending and there were "serious natural justice concerns".
Otago University law professor Andrew Geddis said if police were unsuccessful in overturning the High Court decision, there was a strong case for Parliament to urgently look at putting a legislative framework in place to allow such warnings - albeit with some constraints on that power.
"But also, to look at this question of what happens to the 20,000 warnings that have been given over the last decade and to ask whether some of those warnings should be allowed remain in place, or whether they should all remain in place, or whether they should all be thrown out and a sort of a blank slate approach taken?"
The ruling could have far-reaching and expensive consequences, Prof Geddis said.
"Because if those past warnings have been used to for instance deny people jobs, deny people residency status and so on, and those warnings were unlawful then there's a possibility there could even be damages granted under the New Zealand Bill of Rights Act for the harm people suffered from what was an unlawful breach of their rights."
There were at least more than 1071 formal warnings for sex offences recorded in the past 10 years.
Kathryn McPhillips from HELP said without these warnings, employers and community organisations would have much less information when deciding who was safe to work with children.
"Child sex offending is something which is happening every day in this country and we can't wait until this country might reform its justice system.
"What we had in those warnings was an efficient, effective process that kept children safe.
"So at some point this country needs to make a decision about whose rights should be held up higher: the rights of children not to be sexually abused - or the rights of alleged offenders?"
A police spokesperson confirmed an appeal against the High Court ruling has been filed by Crown Law.
"We continue to provide staff with information concerning the proper approach to formal written warnings."