Regulation for mortgage brokers currently costs £20,000 per head, the Association of Mortgage Intermediaries has revealed.
Speaking at the Mortgage Busi-ness Expo last week, AMI director Robert Sinclair told delegates that brokers need to make a £20,000 profit just to cover costs.
Sinclair says fees for the Fi-nancial Services Authority, the Fi-nancial Services Compensation Scheme, Financial Ombudsman Service, and the costs for education body CeFA and professional indemnity cover add up to around £5,000.
He says: “The cost of compliance oversight for brokers or their firm is about £9,000. The working hours a broker loses from doing com-pliance work amounts to around £6,000. That’s where the £20,000 figure comes from.”
Sinclair will present this figure to the Treasury Select Committee, which has requested information on regulatory costs.
He says: “The cost of regulation is far too great. It is not propor-tionate to the income of the industry.”
Meanwhile, Iain Laing, chief credit officer at Santander UK, told delegates that the FSA’s proposals on interest-only had already affec-ted 2% of its lending.
Laing estimates that the Mortgage Market Review will impair 20% to 30% of Santander’s current lending.
But he is positive about the likelihood of changes being made to the proposals.
He says: “The FSA was saying Q1 2011 to implement the MMR – now it has no specific date in mind and has acknowledged some of the rules could need redrafting.”
Platform also used the event to release research which shows that over half of consumers plan to go direct for their mortgage. Of the 2,000 consumers it polled, just 14% said they would use a broker, with a further 33% undecided. The most common reason for the reticence to use a broker was having to pay a fee.