Tenet has called for a comprehensive review of how the Financial Conduct Authority (FCA) is funded.

This follows the 13% rise in fees announced by the FCA in its latest consultation paper.

As well as the scale of the latest hike – to cover staff costs, IT upgrades and an increase in the cost of central support services – Tenet has echoed APFA’s concerns that the increased burden will be borne by fewer firms.

Distribution & development director, Helen Turner, says the situation is more alarming than the headline statistics suggest.

She said: “The estimated 25% reduction in adviser numbers in the 12 months leading up to RDR, does not take into account any additional individuals who may decide to leave the industry for other reasons during 2013.

“It is therefore neither feasible, fair or financially viable to disperse current external regulatory costs across fewer firms,” she continued. “Such a significant hike is clearly unsustainable and it is now time to look at alternative regulatory funding mechanisms.”

Turner has welcomed the FCA’s pledge to examine the possibility of the current fee model being replaced by one that allocates fees on an income or risk basis.

She added: “That is a potential step in the right direction, but it will be 2015/16 at the earliest before they even publish a discussion paper.

“However, irrespective of any new formula the review delivers, it must recognise the urgent need to begin reducing costs and ensure they are proportionately shared across the whole financial community.”