The Financial Conduct Authority has dropped its plans to charge brokers a £200 annual flat fee for handling consumer buy-to-let, though the sector as a whole will still see a 7.1 per cent fee hike.
The fee was first brought up in the FCA’s CP16/9 paper on proposed fees. The FCA says it has taken account of market objections when dropping the plans.
The objections came from the Association of Mortgage Intermediaries and one private firm.
An FCA policy statement released today says: “We agree with the respondents regarding CBTL fees and have therefore modified the draft fee rate rules consulted on in CP16/9 so that only CBTL firms that do not have permission to carry out any regulated activities will pay the CBTL flat fees.
“The effect of this is that firms in the A.2, or A.18 fee-blocks, or that undertake consumer credit activities in the CC2 fee-block will not pay separate CBTL fees in addition to the minimum fees they already pay through these fee-blocks.”
AMI says it objected to the 7.1 per cent rise in fees for brokers, the overall rise in costs and the proposed £200 fees.
An AMI statement says the trade body is pleased the FCA is removing the £200 flat fee and the consumer buy-to-let FOS levy for authorised firms.
But it adds: “The FCA is however intending to increase its periodic fees for mortgage intermediaries as planned. Despite AMI highlighting the number of FCA staff that should be working on mortgages based on the amount the industry pays, the FCA has again provided no clarification of its costs. It has simply attributed the increase to implementing the Mortgage Credit Directive.”
AMI chief executive Robert Sinclair says: “We are grateful that the FCA has acknowledged some of the issues AMI raised around the minimum fee.
“The FCA has gone some way to reducing the burden on small mortgage brokers by removing the additional CBTL fees. However the continued inclusion of the consumer credit fee is not insignificant. AMI fundamentally believes that consumer credit activities should not require mortgage intermediaries to hold a separate permission as they are already accountable under both the broader FCA principles and specific conduct rules.
“Although the majority of intermediaries will pay the minimum fee, there will be a significant bill for the largest firms who will bear all of the £1.2m increase. We are disappointed that the FCA has failed to give a full justification for the amount being levied on the sector.”
The FCA says a small mortgage broker’s 2016/17 FCA fees will now be £1,384, the same as 2015/6.
The CP16/9 paper originally suggested small brokers would pay £1,584.
However, larger brokers will still bear the overall 7.1 per cent rise in FCA fees for 2016/17.
The FCA policy statement adds: “CBTL periodic fees will still be paid by firms that are registered for CBTL activities and are not in any of the above fee-blocks.”
The FCA got the power to oversee consumer buy-to-let in March 2016 when the Mortgage Credit Directive came into force.