For businesses with revenue less than £1m, the costs incurred, directly or indirectly from regulation, have increased from £28k the previous year, a study found, with FSCS levies in 2015 blamed for a substantial part of the rise.

The figures come from The Association of Professional Financial Advisers’ third annual Cost of Regulation report, released today.

The costs of fees and levies for regulatory bodies also went up for nearly every size of firm, with the average fee and levy pay-out rising a third from £6k to £9k for all firms with less than £1m in revenue, the report stated.

Overall, small to medium firms spend 11% of their revenue on costs associated with regulation, APFA said.

Given the current size of the market and number of clients, this means that the average client is paying approximately £160 each year towards the cost of regulation, the researchers reported.

Chris Hannant, APFA’s director general, said: “Based on advice firm responses, our research shows that each client is still paying hundreds of pounds every year to cover the cost of regulation.

“Fees to cover the running costs of the regulatory bodies continue to remain high both in absolute terms and as a proportion of firms’ revenue, particularly for the smallest firms.

“We believe that a substantial part of the increase in direct costs arises from the FSCS levies in 2015. This further underlines the need for a move to a more sustainable funding approach at the FSCS.

“Policymakers say they are concerned about the need to broaden consumer access to professional financial help. A key part of doing so is to reduce the disproportionate and unsustainable regulatory cost burden borne by advisers.

“APFA will continue to push for radical reform of the FSCS levy and make it fairer for advisers. We will also continue to hold the government to account as it implements the recommendations of the Financial Advice Market Review.”