Industry trade bodies have criticised proposed changes to the Financial Services Compensation Scheme (FSCS) sourcebook.
The Association of Independent Financial Advisers (AIFA) warned the proposed changes could encourage false claims and threaten further increased costs for the industry.
It has called for a delay to the rule changes to align them with the wider review of FSCS funding, which is expected to be published shortly.
Earlier this year, the FSA proposed the FSCS be permitted to compensate investors prior to investigating to confirm they have lost money.
It suggested the FSCS could make payouts to investors without assessing their eligibility where it was not ‘proportionate' to assess the case.
Policy director Chris Hannant said he was concerned with how the FSCS was evolving.
"The FSA has made clear statements that the scheme should be fair, affordable, durable, stable and based on affinity of activity. The current scheme fails to meet these goals for advisers.
"We are particularly concerned that relaxing the process by which consumers are able to seek compensation under the FSCS scheme will encourage fraudulent claims.
Alerted by claims management companies, consumers in the hope of a compensation payment could complain to Financial Ombudsman Service about policies they do not and have never held, Hannant said.
The Investment Management Association (IMA) and the Association of Private Client Investment Managers and Stockbrokers (APCIMS) also criticised the plans.
Guy Sears, IMA director of wholesale, said: "We're disappointed to see that the bulk of the proposal concentrates on improving administrative processes within the FSCS at a time when the scheme rules need a complete overhaul.
"These areas should be suitably addressed under one extensive review to ensure the rules operate to provide protection, that the scheme secures appropriate funding and that consumers understand the nature and extent of any protection."
Ian Cornwall, APCIMS director of regulation, said the proposals appear to addressed "a limited number of ad hoc issues associated with the FSCS and it is unclear why it has been published now given a further consultation paper on the FSCS is due to be published shortly."
The FSA is due to provide feedback on all the responses to the consultation at the end of September 2012.
Partner Insight Video: Advisers have had to adapt to the changing investment landscape.
Investment trust savings scheme