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EXPO 2010: Regulations cost brokers £20,000 each

The Association of Mortgage Intermediaries has calculated that financial regulations are currently costing brokers £20,000 a year each.

Robert Sinclair, director of AMI, recently gave evidence to the Treasury Select Committee on financial regulation.

Speaking at the Mortgage Business Expo, he told delegates the committee has asked the trade body to calculate how much regulations cost brokers.

Sinclair says: “The cost of compliance per mortgage broker is around £20,000.”

The figure includes professional indemnity insurance and costs relating to the Mortgage Market Review.

He says brokers will have to pay an additional £5,000 in regulatory fees and £9,000 in compliance costs.

Sinclair says : “In order to trade a mortgage broker will need at least a £20,000 profit. When we tell this to the committee the response will be shock.”

He says the FSA did not regulate the industry very well and brokers are now paying the price.

He adds: “The cost of regulation is far too great. It is not proportionate to the income of the industry.”


Submit your questions for regulator before Expo

The Association of Mortgage Intermediaries is calling on brokers to submit their questions to the Financial Services Authority in advance of this week’s Mortgage Business Expo. Brokers can submit questions by contacting Caroline Tory at AMI on 020 7826 9030, emailing her at or visiting the AMI stand at the Expo.

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  • Bobby 12th November 2010 at 9:39 am

    What you are getting now is decent, hard working, highly skilled and qualified brokers like myself and Chris leaving the industry now . not the cowboys , they went a long time ago. Its all very sad and our clients will miss us but no one seems to give a damn. If the market ever picks up the cowboys will come back in for a quick buck but I suspect the decent brokers like myself and Chris will be out of the industry for good and be doing something that is valued and respected which this profession certainly is not, especially by the FSA. This has gone too far now and I fear is beyond pulling back from the edge of the cliff.

  • chris jones 12th November 2010 at 12:40 am

    I think we give the FSA far too much credit in thinking they ever have any kind of “master plan” or a conspiracy theory that they want to kill brokers off. As far as I can tell the FSA couldnt think further than the latest crisis/issue that lands in front of their nose. They seem entirely reactionary, give them a single issue to solve and theyle solve it alright but couldnt give a damn about what the consequences are further down the line. If anyone points potential problems out to them they ignore it and bulldoze their chosen solution through right to the bitter end even if it ruins an entire industry or possibly the whole country for that matter. ie they discovered interest only could be a potential problem for SOME clients and MAY have been used inappropriately, answer=try to ban it or make it extremely difficult to get i/o anymore for everyone in the entire country. They couldnt care less about the consequences as long as they reacted to the issue and can tick the box to say theyve dealt with it. After 11 years in the industry as a broker helping hundreds of clients along the way it saddens me to to the pit of my stomach to say I never wish to arrange another mortgage for anyone in my life and my Cemap qualification along with all the FSA regulations can rot on my compost heap for all i care. if the FSA doesnt care about customers getting good sound advice then why should I? im going to requalify in something that is valued instead of something that has been beaten to within an inch of its life.

  • DAVID STREAT 11th November 2010 at 4:33 pm

    What i want to know if these charges come in will this mean the top emnployees of the FSA will get bigger bonuses next year, because we know 100 of them are already on 6 figure salaries.One thing has never been mentioned and in this world of transparancy invented by the FSA, when a broker is fined or a company, and the current charges brokers have to pay, WHERE DOES ALL THAT MONEY GO..WHERE? NOw THERE’S A QUESTION

  • bobby 11th November 2010 at 12:13 pm

    I am desperate to get out of this industry now. I HATE it. No, I love helping my clients but HATE the banks and the FSA who are determined to kill off independant mortgage and financial advise. Life is too short. I have an interview for a completely different career and am excited for the first time in over 3 years about my future. This industry kills your body and soul. I would leave after 20 years this industry at a heartbeat now even for less money ( not that I/we can make a living anymore anyway ).

  • Dazed & Confused 11th November 2010 at 11:00 am

    [RANT]Going back two years ago, we were still a member firm of the AMI. We left because their consistent inaction in representing OUR industry in the face of ever increasing regulation from the FSA made us feel our subscriptions were wasted, and better spent on ensuring a bullet proof and robust compliance process.

    If we want change, and by that I mean change for a better fairer regulation, where Banks, Building Societies, IFA’s and Mortgage Brokers were all regulated on one level playing field, we MUST make our voices heard.

    AMI are NOT representing OUR industry…they are a nice cosy little club making the right noises and doing nowt about it. If firms who are still members of AMI do as we did and resign their memberships, they will cease to be…it also might, just might open their eyes to the fact that those of us who are left in the industry would like our representative body to REPRESENT us without pussyfooting around![/RANT]

  • Tom 10th November 2010 at 8:24 pm

    Well the FSA have tried their damndest to kill offthe secured loans industry for brokers, now they seem heelbent on destroying the mortgage industry as well. What is apparant is that the people masking these decisions do not have any idea about how the industry works. If they did, they would not be introducing legislations that are leaving the consumer worse off as opposed to better off.

  • Robin Banks 10th November 2010 at 8:13 pm

    “All brokers would chuck it in and leave every customer to the banks and building societies to deal with”

    It’s called been priced out of the market and that, my friend is exactly what intended when they decided on regulation, some might call it a conspiracy, I couldn’t possibly comment!

  • mark wilkins 10th November 2010 at 7:35 pm

    Are representations being made to the Business Secretary? All brokers should write to their local MP. I am afraid the FSA is killing not only the mortgage industry but all other areas of the financial services. I am not sure what else can be done. Surely a responsible self regulation would treat customers far more fairly than the nonsence we hear and see coming out of the FSA. Most customers do not know who the FSA is let alone care!!
    Come on guys put pen to paper and start writing to your MP.

  • Chris Hulme 10th November 2010 at 6:25 pm

    At last, we see sense and true analysis prevail and Mr Sinclair states what has been known in the industry for at least a decade but the FSA have been unable, sorry unwilling to accept.
    We should stand together in a unified action – perhaps the AMI will take the lead? or AIFA? Or do we set up a new body staffed by brokers for brokers?

  • Martin Tapper 10th November 2010 at 6:07 pm

    If this came into being it would be tantamount to restrictive practice. The only way that brokers could afford to operate would be to charge customers more, which would not be in the interests of those customers.
    This industry needs a big spirit level so that the playing field can be evened out.
    PLEASE can government take the FSA away.

  • Leslie Squires 10th November 2010 at 5:28 pm

    What a sad state of affairs for the majority of mortgage brokers who have acted in the best interests of their clients, to find themselves not only affected by the current adverse market conditions and new regulations but are now informed that the cost of the new regulation will be £20,000 each. It is surely the time for some common sense to be applied and to kick the control freaks into touch!

  • john allen 10th November 2010 at 5:08 pm

    Yippee I am out of the mortgage industry after 20 years. Its broken, the lenders don’t want brokers and neither do most of the clients and the FSA are nutters. Find something interesting, profitable and fun to do, that certainly is not Mortgage Broking.

  • DAVID STREAT 10th November 2010 at 4:51 pm

    This is unbelievable what next. Have they any idea of the reprocussions. All brokers would chuck it in and leave every customer to the banks and building societies to deal with. The poor devils will never know if they got the best deal or not because these institiutions don’t have to offer advise if they walk in off the street. SO WHAT EVER HAPPENED TO THE SAYING “TREATING CUSTOMERS FAIRLY” what poppycock. Well at least they will be able to speak to some kid who has just left schoolin a call centre reading from a que. This will be like giving a child the keys to a sweet shop.Mayhem. comes to mind and and complaints going through the roof, god help[ us all.

  • john lewis 10th November 2010 at 4:49 pm

    When will the various trade bodies and providers,together with those of us at the sharp end of financial service provision for the masses make a stand and say enough is enough.
    Since 1988 regulation has cost the industry 100’s of millionsand there are still rogues out there,still mortgage fraud and the consumer is slowly becoming worse off, not better off.
    Surely if we all stood together as one we could make a difference, if we don’t,a large proportion of the population will not have access to good financial advice nor will they be able to obtain a mortgage.
    The FSA are slowly killing the industry off.

  • Justin 10th November 2010 at 4:33 pm

    Sure… why don’t we all work in our profession to fund the full salary of some ‘school leaver’ to check our files for us on a full time basis… Next Bright idea please…