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In the FSA's latest retail distribution review paper, the regulator banned providers from advancing finance to IFAs from their own funds, a procedure known as factoring.

Matthew Connell, government and industry affairs manager of Zurich, said this ban could result in less new cash coming into the industry.

Mr Connell said : "There are some regular premium products where we advance commission to advisers and we will not be able to do that in the future.

"Advisers will have to come up with their own plans and offer customers the opportunity to pay for advice over an extended period under the terms of the Consumer Credit Act. This is going to put a big burden on advisers and put a lot of advisers off selling regular premium savings products.

"That is bad news for consumers and the industry. Regular premium savings may not warrant a huge amount of business for Zurich but getting that new stream of money into the industry is important. Those savings build up over time."

Peter Hicks, head of retail sales of Fidelity, said the decision to ban factoring was a step towards ensuring there was real clarity in charges.

He said the responsibility placed on providers to make sure the adviser and consumer were in agreement on the cost of advice seemed fairly straightforward but the demand they monitor and report on extreme levels of charges was a bit more concerning.

Mr Hicks said: "It would be helpful if they could define extreme, although that is easier said than done.

"We do not see the whole of the relationship between the client and the adviser so it should be the FSA's responsibility. It is very difficult for them to say 'let us know if you see anything extreme' without quantifying what that is.

"If you saw a level of charging that would make it impossible for the investment to ever make any money for the client then it is reasonable for the FSA to ask us to keep an eye on that, but in terms of ongoing monitoring and policing, that is the FSA's job."

Keith Thomson, director of investment services of Dundee-based IFA Blackadders, said: "This will cause problems for IFAs dealing with regular premium products. They may not be able to survive."