Mortgage brokers can expect to see a drop in their FSCS bills after 2019 following an overhaul of how the lifeboat fund works out the charges.
The two main reasons for recent high broker bills are a wave of claims against property investment firm Fuel Investments, which involved remortgaging, and because mortgage brokers are exposed to a massive wave of claims in the life and pension intermediation sector.
The Financial Conduct Authority today announced that the FSCS will merge the life and pensions intermediation funding class with the investment intermediation class and rolled protection intermediation claims into the general insurance distribution.
The news was welcomed by the Association of Mortgage Intermediaries, which has campaigned on the issue.
An AMI spokeswoman says: “AMI is delighted that the FCA has listened and agreed with our arguments for a fairer arrangement for mortgage brokers. From April 2019 mortgage brokers will no longer have to pay for the mis-selling of personal pensions and investment business.”
Mortgage brokers will also benefit from a 25 per cent contribution to costs for all intermediaries.
AMI add that the changes will “have a significant impact on the fees levied from 2019”.
However, in the short term mortgage brokers’ FSCS bills will rise. Intermediaries’ bills will rise by £8m in in 2018/19.
AMI chief executive Robert Sinclair says: “The senior management of the FCA listened to our logical arguments and agreed that these changes were sensible.
“We believe that these amendments to the funding of the FSCS should deliver a more balanced industry in the future. In resisting strong lobbying from the provider community, the FCA has stood up in support of smaller advice firms.”