An "explosion" in regulatory costs is becoming a "huge problem" for networks and national advisory businesses, according to a director at Lighthouse Group.
Roger Sanders, managing director of the group's employee benefits division, said increasing FSA, FSCS and FOS levies combined with the costs needed to transition to an RDR-ready business model were hitting businesses hard.
"The regulatory explosion in costs is a huge problem for nationals and networks," he said.
"They have worked hard to keep fees down and this increase has become very difficult for them to manage."
Sanders said the increase in costs is coming from several directions.
He said an increase of more than 15% in the FSA's annual levy for 2012/13 - an increase that will be largely borne by larger businesses - had been supplemented by a number of FSCS compensation levies relating to the collapses of Keydata and Arch Cru.
This is in addition to costs incurred by firms as a result of installing IT systems and other processes to ensure that they are RDR-ready, Sanders said.
And Sanders said it wasn't just the increase in regulatory costs that was impacting the network model.
"Other significant pressures, such as a shrinking capacity for professional indemnity insurance (PII) are making the environment very difficult," he said.
"[PII provider] Chubb has said it will no longer trade in the advisory market and there are rumours that other insurers are considering withdrawing their services too."
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