"There are cases where, even when letters of authority clearly stipulate that they are to remain in force until such times as a client states otherwise, providers ignore that request – meaning that, each year, in some cases, after 6 months, we have to request a further authority from the client to do work on those arrangements on their behalf.
"There have been many times where well intended legislation had unintended consequences and we need to be careful this isn’t added to that list."
An FCA spokesperson said the regulator was open to hearing people's concerns about any effects the rules may have in practice.
They said: "We are consulting on our proposals and welcome feedback on the proposals in our consultation paper, including how they might operate in practice."
Mr Chan also questioned the practicalities of the new rules. If an advised client is switched to non-advised, will the provider "switch the whole portfolio to these ‘investment pathways’ or just the new top up sum?" he asked.
"In either case, it would interfere with the investment strategy the adviser had originally recommended and managing and might lead to a bad outcome for the client," he warned.
Mr Cameron concluded the rules may further increase the trend toward giving ongoing advice, and the need to demonstrate ongoing advice has been given.
He said: "Advisers may want to put in place provisions to make sure that their clients either receive regular advice or they do consult their adviser before making any changes to their investments.
"If it goes through as proposed, the new rules will add further encouragement to make sure they give ongoing advice to their clients."