By Chris Vellacott

LONDON (Reuters) - Private banks are preparing for a surge in assets sparked by proposed new regulations which they expect will punish the country's independent financial adviser industry.

The Financial Services Authority is proposing to increase minimum qualification requirements and replace commission-based selling common among IFAs with fees for advice. A consultation period ended on Friday and new rules are expected in 2012.

The move towards a fee-based model -- with higher regulatory costs -- is widely seen as a greater burden on intermediaries, while private banks have traditionally used the fee-based model to sell banking and investment services to wealthy clients.

And, as they struggle to build assets at a time when little new wealth is being created, many see a shakeout among IFAs as an opportunity for expansion.

"There is a real cost challenge for the IFA sector and the higher end (advisers) might well be thinking: this is going to get very difficult," said Clive Cunningham, a partner specialising in wealth management at lawyers Taylor Wessing.

He said many would look to move their business into a larger organisation that can sustain the necessary infrastructure. The private bank could do a deal to allow access to the IFA services with a view to absorbing them at a later date.

Other private banks may buy client lists from firms who are exiting investment management ahead of the new rules.

Tracey Reddings, head of UK private banking at SG Hambros, the British wealth management arm of Societe Generale (SOGN.PA: Quote, Profile, Research), said the bank has set itself a target of adding 1.3 billion pounds in new assets to the 9 billion pounds currently under management over three years by attracting intermediaries.