Affordability checks by lenders may not lead to lower FSA fees for brokers

Lenders taking on more responsibility for checking borrowers’ affordability may not result in lower fees for brokers.

Last week the Financial Services Authority released a consultation paper on regulatory fees and levies in which it has ruled out calculating brokers’ fees based on the riskiness of their business and revenue.

The Association of Mortgage Intermediaries had been lobbying the FSA to lower broker fees be-cause the Mortgage Market Review passed responsibility for affordability checks to lenders.

In its paper, the FSA says: “One trade association suggested that although regulatory fees may not be able to resolve any imbalances bet-ween manufacturers and distributors of financial products, we did in practice set the landscape in which firms operated.

“The example it gave was the MMR, where its view was that the FSA intended to move the risk of assessing affordability from the intermediary to the provider. They wanted to see this reflected in a shift of regulatory costs and therefore lower fees for the mort-gage intermediary.”

But in response the FSA says both lenders and intermediaries have always had a role in assessing affordability and one of the aims of the MMR is to clearly define these responsibilities.

In its feedback, it says: “In CP10/16 we set out how we expect lenders to assess affordability moving forward.

“We will discuss the role of the intermediary in the mortgage sales process when we issue our MMR Distribution and Disclosure paper later this year.”