Friends Life has confirmed it is raising a fee on some Sipp products by 21.2%, affecting about 2,000 customers.
The firm has defended the move after criticism today among the adviser community and pointed out that although the percentage increase seems high it amounts to an annual average of £135 per customer.
Only the annual administration fee is increasing.
Friends Life said it has absorbed increased regulatory costs for two years but can do so no longer and therefore has introduced the fee increase.
It told Sipps Professional that it has avoided raising its fees as a result of Client Money and Asset Return regulation when it came in in 2011, but now needed to do to cover costs.
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Customers have been given six weeks notice, rather than the standard 30 days.
The change will come into effect on the anniversary of the customer's policy rather than there being a set date for all policies.
Hélène Barnes, public Relations manager for retirement income at Friends Life, said: "We are now increasing fees but it's only the annual admin fee. We have absorbed costs until now but it's not possible anymore.
"This increase follows a number of years where no fee increases have been required.
"The strengthening of CMAR regulations in 2011, which resulted in us introducing additional responsibilities and reporting activity for our banking, assets and compliance teams, as well as the additional cost of introducing external CASS audits has increased the amount of resource and cost required to manage these policies.
"We are happy to discuss customer's individual needs on a case by case basis."
Friends Life added that figures reported elsewhere that the change was affecting three clients of a particular adviser £2,100 in total were inaccurate and that £450 was the correct amount.