Last year, pre-tax profits dropped 10 per cent, from £931 million ($1.3 billion) to £835 million, while profits after tax and dividends plummeted from £171 million to £61 million. 

“The steady increase in turnover over recent years continued in 2015, but profits across the sector were significantly down by about £100 million. For me this clearly demonstrates the impact of FSCS levies on the viability of the sector,” Chris Hannant, director general of APFA, said in a statement.

“Retained profits fell 65 per cent to £61 million. This shows how unsustainable the current system is, with the FSCS levies severely undermining the capacity to generate funds to invest in the future.” 

Hannant added that there was an “urgent need” for the FSCS levy approach to be replaced with one that is “sustainable and fair” so as to reduce the regulatory burden on advisors and cut the cost of advice.

Three years on from the introduction of new rules following the retail distribution review, the number of financial advice firms that are registered with the FCA was around 14,491 at the end of 2015, which is below the pre-RDR total. The rules, which were enforced in 2013 to boost transparency in the investment industry, include a ban on advisors earning commissions from fund companies in return for selling or recommending their products.