The Financial Services Compensation Scheme is set to raise mortgage broker levies by £3m in the 2018/19 period.
The final 2017/18 levy for home finance intermediation was £14m. However the estimated 2018/19 levy will be £17m, a 21 per cent increase.
This is despite the fact that the 2018/19 bill will only cover nine months as the lifeboat fund is changing its billing to match the financial year rather than calendar year.
The levy cost reflects an expected increase in the cost of handling claims.
The FSCS says much of the increase is due to processing claims against Fuel Investments.
It says: “One firm in particular, Fuel Investments Limited, accounts for a a large proportion of our forecast costs.
“Claims against Fuel typically relate to advice to remortgage residential properties in order to raise funds to invest in high-risk property schemes.”
Around 70 per cent of the 2017/18 levy related to claims against Fuel.
The lifeboat fund registered 1,044 completed home finance broker claims in 2017/18. It expects to complete 624 in 2018/19.
The predicted increase in mortgage broker levies will be unwelcome, but home finance intermediaries have avoided a possible extra FSCS bill relating to the 2017/18 year.
The FSCS underestimated how much it would cost to handle claims against mortgage brokers by £5m in the period.
However, it decided not to pass the bill on.