FSA to hike mortgage broker fees by almost 10%

The Financial Services Authority is increasing mortgage broker fees by almost 10%, its Annual Funding Requirement for 2012/13 has revealed today.

In February the FSA launched a consultation on its proposed fees for the financial sector and has today released the final levies.

In its consultation paper it proposed that mortgage brokers would pay £13.43 for every £1,000 of their annual income in 2012/13, up from £13.12 in the previous year.

However, it has hiked this to £14.33 of their annual income for every £1,000 of business.

Meanwhile, fees payable to the Money Advice Service – the Consumer Financial Education Body – will increase from £1.36 to £1.67, up from the proposed £1.51 in its consultation.

Overall, mortgage brokers, who fall within block A.18, will be charged £14m for 2012/13, down from the initial estimate of £14.5m.

The FSA estimates there are 5,473 firms that fall into this fee block, but it says because they have seen a drop in income they will have to pay more in fees.

In its report, the FSA says: “For A.18 we have seen a reduction, of around 10%, in the income tariff data submitted by firms in this fee-block.

“Consequently year-on-year final fee rates will go up 9.2%, negating the effect of a 7.3% decrease in the AFR allocated to this fee-block.”

Robert Sinclair, director of the Association of Mortgage Intermediaries, says: “It is an exceptionally difficult time for our industry and we continue to see income levels come under pressure.

“The regulator appears to want to continue to increase the amount of fees levied at mortgage brokers.

“This is unsustainable and will cause firms to consider whether the FSA costs are worth the risks they are taking in this business.

“The FSA needs to stand back and ensure it balances the cost of regulation with the amount it is asking firms to pay.”

Overall, the amount financial firms have to pay has been reduced by £18.6m from the proposed figure of £578.4m to £559.8m.

This compares to £500.5m for 2011/12, which represents an increase in annual funding of 11.9%, compared to the 15.6% increase proposed in the original consultation.