FSA hikes mortgage broker fees by 33%

The Financial Services Authority has today released its annual funding requirements for 2010/2011, which shows mortgage brokers face a 33% fee increase.

Mortgage firms will now have to pay a flat fee of £1,000, compared to roughly £745 in the previous year.

Larger mortgage firms and networks will have to use the FSA’s calculator to work out what they will have to pay on top of the flat fee.

The Association of Mortgage Intermediaries had been campaigning for the regulator not to introduce the proposed fee hike.

It has previously estimated that based on what firms were charged last year, a £500,000 turnover firm is looking at a 32% fee increase, whilst a £5m turnover firm could see a 87% increase.

The FSA has increased its annual funding requirement for the mortgage sector from £10.9m in 2009/10 to £14.4m for 2010/11.

The regulator says its costs are increasing in terms of supervising the sector primarily concerning the work associated with the Mortgage Market Review and enforcement activity in relation to mortgage fraud work.

Overall the FSA’s annual funding requirement for 2010/11 is £454.7m, up from £413.8m in 2009/10.

Robert Sinclair, director of AMI, says the FSA proposals represent a substantial increase in fees for mortgage intermediaries who already face a tough economic situation.

He says: “Mortgage intermediaries were already paying a disproportionate share of regulatory costs, which are ultimately and inevitably met by consumers.  

“For those mortgage intermediaries paying just minimum fees and who also hold insurance permissions the increase will be limited. But for larger firms, and those without insurance permissions, their FSA fees will rise in some cases disproportionately and significantly.”

He says the FSA has however decided not to raise the fee tariff rate for mortgage intermediaries from that proposed in the consultation paper, despite the considerable reduction in the tariff basis from that originally consulted on.

He adds: “We will continue to push for a fairer cost distribution system for the intermediary sector.”