Thousands of financial advice firms have been warned they face potential fines or bans after a review by the City watchdog found three quarters were failing to keep their clients properly informed about charges.
The Financial Conduct Authority (FCA) said that if they failed to clean up their act by later this year it would consider referring them for enforcement action.
It is already likely to refer two companies - one financial advisory firm and one wealth management firm - after "egregious failings" uncovered by its latest review.
Clive Adamson, the FCA's director of supervision, said: "I am disappointed with the results of our latest review looking at whether advisers are clear with their customers on costs and services provided.
"These results are a wake-up call and we expect the industry to respond."
The regulator's latest review was the second of three checking on how advisers were selling investments after the introduction of reforms at the start of last year including stricter rules on transparency.
They aimed to ensure consumers had the right information to make informed decisions.
But the FCA said its review found 73% of firms were failing to provide the required information on the cost of advice. The data was taken from a sample group of 103 such firms. There are around 5,000 in Britain.
The regulator also said most firms were not giving clients "clear upfront generic information on how much their advice might cost" or additional information on ongoing charges that might fluctuate.
It said failings were widespread across the industry, with wealth managers and private banks performing more poorly than other firms in nearly all aspects.
They suggested consumers could be unaware or even misled about the initial or ongoing cost of advice, the type of service offered by a firm, or the service they could expect to receive for the ongoing fee, the regulator said.
A third review will begin in the third quarter of this year and firms still falling short of disclosure rules were warned they could face punishment, including "referrals to enforcement". The FCA has the power to levy unlimited fines and industry bans.