The Financial Services Compensation Scheme has announced that £5m will be levied on home finance intermediaries this year, with brokers paying £4m.
Provider contributions, which the FCA introduced as a requirement in May 2018, will provide the remaining £1m of the total levy.
This is a significant fall from the £25m paid last year, due to brokers no longer having to contribute towards pensions and investment claims.
The figures are stated in the 2019 – 2020 budget, published today.
The budget also shows that the 2018 – 2019 plan and budget assumption for home finance intermediation was 684 cases, whereas the estimate of completed claims was actually 1,605 – a 135 per cent change.
The plan and budget assumption for 2019 – 2020 has been set at 696 cases – a 2 per cent rise on last year.
The spike in numbers in last year’s claims is explained by there being “increasing volumes of mis-selling claims being provided with very little substance or evidence to support the claim being made,” says the FSCS.
It adds that it is “making efforts to stop these claims before they are made and to make clear the evidence we would need to fully investigate the claims. This is factored into our forecast which sees the volumes and uphold rates return to their previous levels.”
Ami chief executive Robert Sinclair says: “This has been a two-year journey to achieve a fairer outcome for all mortgage brokers and it will have a significant impact on this year’s fees. This was a significant win for Ami, who were often the only entity arguing for these new and fairer class allocations and for the new 25 per cent provider contributions.”