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FSA consults on discounts

In its consultation paper CP04/9: Periodic and Application Fees for Mortgage Business and General Insurance Broking, the FSA says it is proposing to implement, from 2005-2006, a discount for firms that fall into multiple fee blocks but only carry out limited amounts of business in some of those blocks. The minimum income band is £100,000 and under.

Under the proposal, if a firm is a member of more than one fee block it will only have to pay half of the fee in any fee block where it is liable to pay only the minimum fee. However, if it only pays the minimum fee in all of its fee blocks it will pay 100% of the largest minimum fee and receive 50% discount on the other minimum fees.

The FSA says: “This should benefit fee-payers carrying out mortgage or GI broking in an ancillary way, for example, an authorised IFA who advises occasionally on mortgages.”

But the FSA adds that to recover the same amount of costs within a fee-block, fee rates for non-minimum fee-payers would have to be slightly higher.

Michael Norwood, mortgage adviser at Kilkeel-based at Mortgages Made Easy, says: “This proposal shows the FSA is committed to retaining the small broker sector. It also exposes a lot of network propositions for what they are – money-making machines working off the back of the new regulations.”

Chris Cummings, director of the Association of Mortgage Intermediaries, says: “There has been a good response to the consultation so far. We will now try to identify any unfairness in the fee bands.”


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