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FSA ups annual funding by almost 10%

The Financial Services Authority has announced its proposed annual funding requirement for 2010/11, which says that the FSA overall funding costs for the next 12 months will increase by 9.9%.

For mortgage brokers, minimum fees payable to the FSA are set to go from £745 to a minimum £1,000, a 34% increase on what brokers were paying before.

The consultation paper published by the regulator on the proposed fee changes reveals that mortgage brokers could even be facing a maximum increase in fees of up to 67%.

The paper also reveals that five unnamed trade associations were against the new minimum £1,000 fee.

Specifically, the trade bodies raised concerns that the FSA has not provided any evidence that the cost of regulating mortgage brokers has increased in proportion to the fee increase.

Overall the funding costs relating to mortgage brokers rose by £3.5m on the budget for last year.

General insurance brokers’ fees are to climb 122% while for IFAs their regulatory bill will go down by 50%.

The regulator says that a more transparent fee structure will mean that 60% of firms will actually pay less.  

The increased cost of intensive supervision will be levied on those firms whose size and impact require the most regulation from the FSA.

The annual funding requirement for 2010/11 is £454.7m, up from £413.8m in 2009/10.  The 9.9% increase reflects the FSA’s intention to minimise any fee increases by concentrating only on essential areas of work:

  • The delivery of the credible deterrence philosophy which is central to the FSA’s supervisory approach;
  • The policy reform programme, driven by the Turner Review, which forms the FSA’s response to the financial crisis and covers critical issues such as reforms to liquidity and capital regimes; and
  • Ensuring delivery of the wider policy agenda mandated by the European Union.  This includes Solvency 2, the review of the capital adequacy regime for the European insurance industry, and the largest project undertaken by the FSA.

“We recognise that any increase in the industry’s costs is unwelcome at a time when margins are under pressure in some segments of the industry. However, the overall increases are necessary to deliver our new intensive supervisory approach.”

Hector Sants, chief executive of the FSA

Hector Sants,outgoing chief executive of the FSA, says: “The way the FSA regulates has changed radically, both in approach and intensity over the last three years.

“We recognise that any increase in the industry’s costs is unwelcome at a time when margins are under pressure in some segments of the industry.  

“However, the overall increases are necessary to deliver our new intensive supervisory approach.  The new fee structure will ensure that the costs are fairly distributed and the increased investment is paid for by those firms who will be subject to the increased scrutiny.”

In 2009/10, the FSA hired 280 new staff as part of its Supervisory Enhancement Programme.  The full year costs of these staff will be represented for the first time in 2010/11 and equates to a 4% rise in total FSA costs.

The FSA says the increase in funding relates to extra investment neeeded to supervise the very largest firms.

When the FSA published its Business Plan for 2009/2010, it increased the amount raised by firms by £117m.

Out of the £117m increase, the regulator said that approximately £70m had been factored in to account for the increase in costs of delivering higher quality supervision over the course of the year.

 

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  • Dave Doncaster 16th February 2010 at 10:19 am

    “approximately £70m had been factored in to account for the increase in costs of delivering higher quality supervision over the course of the year”

    Once again, the FSA have shown their increased incompetence and disregard for doing their own job. The FSA should have had the relevant supervision in place from the start to have prevented the regulated banking bodies from putting us into the credit crunch.
    Now their answer is to charge the people who are still trying to pick up the pieces from their own ineptness.
    NOT VERY CUSTOMER FRIENDLY !!

  • Glen McKeown 13th February 2010 at 12:39 pm

    And what’s the betting that the NAO give them a nearly clean bill of health – well it didn’t have a couple of adverse comments it might seem like a whitewash!
    Will someone demonstrate for me any genuine benefit that has emanated from the FSA in its 10 years of existence – other than providing a nice salary for 3,000 people.
    Has anyone ever come across a positive comment on this organisation?

  • peter sowerby 12th February 2010 at 8:31 pm

    £413.80m for 2009 to 2010, what did we get for that and the years before? the FSA sat and watched while the banks almost ruined the country. But the FSA banned about 70 individuals from the mortgage industry, so that must be money well spent (not).
    It seems that however pointless, out of date and incompetant they are they can just sail along in a world of their own.
    I’m disgusted by them and all they represent.

  • Nick 12th February 2010 at 5:19 pm

    Having recently visited the FSA offices in gleaming Canary Wharf, I was agog with the opulance of it all. They even have thier own label bottled water. sparkling and still!!!!!
    So the secrets out were are paying for this. Obviously normal tap water or even UK sourced bottled water is not good enough fop them.
    Income and profit levels have never been so bad in 11 years of trading. Business levels are down, we tighten our belts, we reduce our costs, for what reason? —— to pay our increase fees later this year! Goodbye Hector, bet he gets a golden handshake a bonus a big pension and a glamerous leaving do.
    Still its only fair that we pay for him to go. Wonder what his next job will be.
    I bet I can guess, Humpty Dumpty.

  • Carol 12th February 2010 at 12:15 pm

    As usual nobody helping the small business – us workers who keep the country going. Because of the actions of the banks which the FSA did not supervise properly we are doing a fraction of the business, pose little risk and so our fees should come down. If we do 2 mortgages per month in this climate and say get £300 in commission, the FSA want to take a third of this. By the time we pay our other costs, it is just not going to be worth it. Lose the brokers and the consumer suffers again.

  • David James 12th February 2010 at 11:33 am

    I am certain that when the new Conservative government does a post mortem on the benefits of the FSA it will prove to be one of the most expensive, useless, waste’s of money ever. The reality is that consumers are no better protected than they ever were and it is upto the lenders to inform the police if any wrong doing is suspected. It’s laughable when the FSA say “we have caught another one”, a blind detective with half a brain could catch the people that are sanctioned by the FSA. Who authorises these people in the first place? O’h the FSA!!

  • MARTIN CALDER 12th February 2010 at 11:20 am

    ONE EASY SOLUTION, CUT THE BONUSES AND USE THE MONEY SAVED, TO COVER THE EXTRA FUNDING REQUIREMENTS.

  • Michael White CEO Emailmortgages 12th February 2010 at 10:56 am

    Unfortunately, as there are a diminishing number brokers left to fine, it has been deemed entirely reasonable to raise these required funds via the remainder, that is to the FSA.

    It may cost us more, but we can all sleep safer at night knowing there is a far “higher quality of supervision in place”.

    On a more serious note, it is a very sad state of affairs that time and again The FSA demonstrates just how detached from reality it is. I guess this is not surprising because in FSA world they can do no wrong and get rewarded in the process. I will not even dwell on the fact that they ‘allowed’ so many problems to manifest themselves in the first instance!

    This is exacerbated by what must be an embarrassed need to rectify the original supervisory errors by completely overreacting and attempt to create the perfect financial services world. Such perfection based on misguided quantitative theory and little or no respect given to the practitioners’ comments or proposals.

    And yes, the argument is beginning to build quite nicely that a hidden agenda possibly exists which is all about the destruction in almost a genocide fashion of mortgage advisers, particularly directly authorised…..I find this most worrying.

  • ANON 12th February 2010 at 10:56 am

    They are a government quango and therefore answerable to themselves, how can an increase of 9.9% in fees to justified when in realty advisers are doing less business and finding it harder to keep their heads above water.

  • Dave Smith 12th February 2010 at 10:30 am

    The FSA are morphing into another Gordon Brown body – spend on paperwork, tax, control and sqeeze the smaller players because they do not have the ability or stomach to fix the real problems. But charging me £1,000 for keeping my arse covering papers in the right order and adding no value or real protection to the consumer – makes these pen pushers feel as if they are justifying their existance.

  • G Rowell 12th February 2010 at 10:28 am

    “We recognise that any increase in the industry’s costs is unwelcome at a time when margins are under pressure in some segments of the industry.” … but do we care about the IFA market anyway…just employed 280 more supervisors to make it more difficult….. give a target to the supervisors to increase fines ….banks are making money…I`m leaving…big payout…. Bye Bye – says it all!!!

  • John 12th February 2010 at 10:19 am

    Are the FSA for real? Increasing the fees to Mortgage Brokers in the current economic climate? Why won’t the FSA just come straight out with it and say “We really don’t want Directly Authorised Mortgage Brokers as part of the Financial Services regime”.

  • an adviser 12th February 2010 at 9:49 am

    Perhaps the FSA should look at charging a lot more than they do to supervise the banks who were the cause of the mess rather than networks and advisers.

    When the Government and the FSA have their way and get rid of advisers with client bases outside of London and the South East, who are not prepared to pay a fee for financial advice, they will find the FSA has lost its major revenue stream.