Mortgage brokers could pay less in FSCS fees under new FCA plans to make lenders pay more when intermediaries go bust.
Under the current scheme, brokers pick up the bill for claims made against other brokers in default.
The bill can be large. Mortgage brokers paid an extra £10.5m in the 2017/18 year after just one company went into default.
The FCA laid out the plans in a consultation paper on the future of the FSCS, published today.
The consultation paper asks for market views on “requiring product providers to contribute 25 per cent of the compensation costs falling to the intermediation classes”.
The regulator also has plans hike home finance intermediation compensation limit from £50,000 to £85,000.
This would be to “reflect changes to the options available to consumers when they retire”, according to the FCA.
The regulator also wants to change the FSCS funding system so that brokers handling pure protection insurance move from the life and pensions group to the general insurance class.
This would mean they no longer pay extra levies to handle claims against self-invested personal pensions.
However, they would contribute to any claims for payment protection insurance.
PPI claims are expected to spike in the coming years due to the FCA bringing in hard deadline for claims.