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IFAs face a steep increase in fees this year as the FSA raises its regulatory fee and levy requirement for authorised firms.

Collectively, the FSA's fee block comprising financial advisers who hold clients' money, has risen by 8.2 per cent, from £19.6m in 2007/2008, to £21.2m for this tax year.

Financial planners in fee block A13, who do not hold clients' money, will also see fees rising collectively to £43.9m, compared with £40.6m last year.

However it was not all doom and gloom, with three fee-blocks experiencing a deduction from the projected amounts forecast in February this year.

The FSA lowered its regulatory fees and levies for fund managers (fee block A7), operators, trustees and depositories of collective investment schemes (fee-block A9), and firms dealing as principle (fee block A10).

Allocation of the AFR to fee-blocks for the period from 1 April 2008 to 31 March 2009, FSA Consolidated Policy Statement

Commenting on the results, Martin Walton, finance director of the FSA, said: "We are pleased that firms' fee rates are either the same as or lower than those proposed in the consultation. However, we recognise that our planned expenditure for 2008/2009 will be higher than in the previous year. This reflects the programme of activity set out in our business plan.

"We are committed to making it easier for firms to do business with us, and firms will be able to use our on-line fee calculator to get an indication of the fees they will actually pay."

However the news may come as scant consolation to IFAs struggling to make ends meet. John Burnard, formerly principle of Leicestershire-based IFA New Life Financial Planning, recently sold his firm and cited increasing regulatory fees as a contributing factor in the buy-out.

He said: "My total regulatory costs as far as fees, indemnities and so on were over £8000. It is a considerable burden for an IFA firm to shoulder. You have to earn £8000 before you can even make any profit and then on top of that you have tax, national insurance and staff to pay."

Calling for an overhaul of the regulator's fee framework, he added that rising costs were an increasing threat to small IFA business.

He said: "It is difficult. The whole system of the pricing of financial services products needs looking at again. It is a complex issue, but the way fees have gone up in the last four or five years has made it very difficult for a small IFA to make ends meet."