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Brokers may call it a day as FSA fee deadline looms

The industry is braced for more mortgage brokers to leave the market as the deadline looms for them to cancel their permissions with the Financial Services Authority.

Firms are due to pay their annual fees to the regulator on March 31 and brokers who wish to cancel or change their permissions must notify the FSA by this date if they are to avoid paying regulatory fees for the next year.

Industry consultant Michael Bolton says: “If you’ve hung on as a mortgage broker in the hope that the market is going to return you are unlikely to continue with your permissions. I think the writing’s on the wall.”

But he says for those brokers who have successfully diversified, there is no reason not to pay the fees.

Bolton adds: “If you’re planning to stay in the market and you’ve got a client bank that is big enough to keep you in business, why would you not pay your FSA fees?

“Even if you cannot earn a decent proc fee out of it, you still need to have mortgage permission if you want to offer a broader range of services. It’s all about diversification.”

Robert Sinclair, director of the Association of Mortgage Intermediaries, says: “Towards the end of last year we became aware that a number of firms were cancelling their permissions and we expect this to continue. March 31 is a critical date as it will determine the level of FSA fees.”

He believes that insurance permissions could also fall.

Sinclair adds: “Some brokers may think it’s not worth holding onto insurance permissions and work on a referral basis to save on fees.”
Danny Lovey, proprietor of The Mortgage Practitioner, fears the worst.

He says: “March 31 will be a watershed. Unfortunately, for many brokers it will involve throwing in the towel to stop bleeding cash.”

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