View more on these topics

Brokers may be writing blank cheques to FSA

Brokers have been warned that they could be writing blank cheques to the Financial Services Authority when it comes to paying their annual permission fees.

As the deadline for paying annual regulatory fees looms many firms are weighing up whether they want to stay in the mortgage market for another year and, more importantly, whether they can afford to.

March 31 – the deadline for cancelling FSA permissions – is fast approaching although final regulatory fees will not be set until May.

After that, the FSA will start in-voicing brokers from June. Effectively, this means brokers will have to commit to the annual cost with-out actually knowing what the final bill will be.

The regulator maintains that the process of fee setting, which in-cludes an indicative fee calculator for brokers and a consultation process, is as clear as it can make it.
A spokesman for the FSA says: “We are doing our best to be as transparent as possible to help com-panies make the best decision.

“It would be worse if we didn’t give companies the chance to comment.”

But Danny Lovey, proprietor of The Mortgage Practitioner, points out that the final fees depend on the number of directly authorised brokers who leave the market, with charges being divided among remaining firms.

So brokers will be left to foot a regulatory bill which has not been finalised.

He adds: “The regulator seems to be saying that if brokers don’t get out of the market by March 31 they are committed to paying next year’s fees from June.

“Basically, the FSA is asking for a blank cheque because it can’t tell us by March 31 what its fees will be in June.”
But Robert Sinclair, director of the Association of Mortgage Inter-mediaries, says the final fee is unlikely to vary too much from the FSA’s estimate.

He says: “If the fee is different it won’t go from £5,000 to £50,000 – it will only be a matter of 10% either way.”
Sinclair argues that if fees are the main factor deterring brokers from staying in the market, the writing may be on the wall for them anyway.

Mortgage Strategy Online last week polled brokers on whether they were considering cancelling their FSA permissions. Out of 1,000 responses, 32% said they were thinking about not renewing their permissions.

Recommended

Broker document service unveiled

A Lancashire-based compliance firm has launched a service where-by brokers can buy compliance manuals and supporting documents on a one-off basis.

Cable’s way

What do you believe needs to be done to get mortgage lending going again?

It seems this is already starting to happen. The government, through its ownership of Northern Rock and virtual ownership of the Royal Bank of Scotland and Lloyds/HBOS, can ensure that a strategy of lending is pursued but we must be clear what the framework for new mortgage lending involves.

RBSIP cuts two-year fixed rate deals

Royal Bank of Scotland Intermediary Partners is reducing its two-year fixed rate deals with rates starting from 3.59%.

In Focus Ebola cover - thumbnail

White paper — In Focus: Ebola Virus Disease

Jelf Employee Benefits focuses on Ebola Virus Disease (EVD) and what this means for businesses with operations in West Africa. This will be of particular interest to those with employees either travelling to, or living within, West Africa, the area affected by the most catastrophic outbreak of Ebola to date.

Newsletter

News and expert analysis straight to your inbox

Sign up