Hundreds of financial advisers who left client-facing duties at the end of last year due to new regulatory rules now appear to be returning to the industry, according to the Personal Finance Society (PFS).
The organisation has issued 2,185 statements of professional standing (SPS) since January, a sign adviser numbers are replenishing, said its chief executive, Keith Richards.
"We have a growing number of professionals indicating that advisers were able to better respond to both the requirements of RDR and the consumer reaction," he said.
Official estimates from the Financial Conduct Authority (FCA), previously the Financial Services Authority (FSA), suggest there has been a 20% fall in the number of regulated advisers - to fewer than 20,500.
But Richards said some of the drop-off was down to the exits of advisers who were planning on leaving regardless of changes brought in following the Retail Distribution Review (RDR).
However, Richards was less positive about the effects of what he said were escalating regulatory costs.
Increases in regulatory fees - which cover the running costs of the FCA as well as the Financial Services Compensation Scheme and the Financial Ombudsman Service - could force many firms out of business in as little as three years, he said.
Adviser groups' contribution to the regulator's annual budget for 2013/14 is estimated at almost £40m, up 13% on the previous 12 months. Advisers will foot some 9% of the FCA's bill, less than fund managers.
"If regulatory costs keep increasing year on year, it gets to a point where companies will be at risk," Richards said.
"[The fees allocation] is a method on route for disaster and it needs to be addressed for the benefit of the consumer. Otherwise consumers will be dis-served and firms will go out of business.
"At the current rate, with the impact [it has] on advisers, it has to be addressed within three years, or it will begin to have an impact on consumers."
Richards called on the regulator to conduct a branch and root review of its charging structure and consider alternative models.
One could be to introduce a funding levy on consumers in the form of a regulation and compensation tax, similar to the insurance premium tax model in general insurance, he said.
