Mortgage Strategy today starts its Bring Down FSA Fees campaign. We are calling on the Financial Services Authority to reduce its annual fee to mortgage brokers following the announcement in its 2012/13 budget forecast that it will rise by 9.2%.
In its Annual Funding Requirement published last week, the regulator revealed that for average financial advisers it is increasing broker fees from £13.12 to £14.33, for every £1,000 of brokers’ annual income in 2012/13.
The FSA says its income from broker firms has dropped, so to make up the shortfall brokers will have to pay a larger portion of their income.
In addition to their FSA fee, brokers have to pay a Financial Services Compensation Scheme levy and a Financial Ombudsman Service levy.
Robert Sinclair, director of the Association of Mortgage Intermediaries, estimates that a small firm with a mortgage income of £50,000 and insurance income of £30,000 will pay £1,854.77 in fees in 2012/13, up from £870.44 in 2005/06.
A large firm with £2m mortgage and £1m insurance income will see its fee rise from £14,653 to £51,588.
Sinclair backs our Bring Down FSA Fees campaign and says that although it may be too late to make the FSA change its levies for 2012/13, we could prevent it from doing so again in coming years.
He says: “Our industry has a lot of directly authorised and larger firms that will be hit. It will put up their cost of doing business.
“If the regulator keeps charging more and lenders change the way they calculate proc fees then there is only one way this can go – you can only squeeze the market so much.”
Pat Bunton, director at London & Country, says: “We, along with every other firm, has had a tough few years and seen the market contract from £360bn to £140bn. To get close to a double digit increase in fees against a backdrop of a market size that is a third of where it was is uncomfortable.”
He adds: “Most firms operating in the market have seen their income fall and have had to watch costs very tightly. It would appear the FSA is in a much more privileged position and can set its own budget and that seems to be an ever increasing budget.”
To voice your support, email Mortgage Strategy’s editor Robert Thickett at firstname.lastname@example.org, making sure you put ’Bring Down FSA Fees’ in the subject line.
The aim is to present a petition to the FSA to make it think again about the massive bill it has presented to an industry already struggling from the financial crisis it failed to stop.