The Association of Mortgage Intermediaries will challenge proposals to lift broker fees by 10.4% to £21m by the Financial Conduct Authority, despite broadly welcoming the watchdog’s funding plans.
The regulator plans to lift broker fees to fund its 2023/24 business year, which sees its budget lift 9.5% to £684.2m, with which it will oversee the UK’s 60,000 regulated financial firms, including the mortgage industry’s roughly 100 lenders and 18,000 brokers and broker firms.
The FCA says it is raising its charges partly to account for new projects such as the £5.3m cost for Consumer Duty and £12.7m to oversee a post-Brexit future regulatory framework.
But Ami chief executive Robert Sinclair says: “We will be challenging the 10.4% increase in the cost of regulating our sector as the funding requirement has only increased by 8.4% and we do not have any explanation as to why the mortgage sector should bear a disproportionate share of the costs.”
The move comes after the broker body says it has already won a challenge to the regulator over the cost of bringing funeral plan providers under the FCA’s supervision.
Ami points out: “We were the only consultation respondent to argue that £5m of costs from bringing funeral plan providers under FCA regulation should be covered by firms within that sector and not the broader fee-paying population, as proposed.
“The FCA agreed with our stance, meaning mortgage intermediary firms will no longer have to contribute to this cost recovery.”
Ami’s Sinclair adds: “Ami has again demonstrated its value to the industry by challenging charging all firms for the costs of creating a new authorised class of firms. This is an important precedent.
However, the broker association largely welcomes the rest of the funding settlement for the sector.
Due to lower Financial Services Compensation Scheme costs, Ami says, if firms have the same turnover as last year they should find their fee invoices are broadly the same.
It adds that firms with an increase in turnover, particularly on their protection business, will see higher fees compared to 2022/23. Small firms have their fees frozen at the same level as last year.
Firms with appointed representatives or introducer appointed representatives will also see their levy frozen at 2022-23 rates of £266 and £80, respectively.
Sinclair says: “We welcome the holding of smaller firms’ fees in these turbulent times. In a volatile interest rate environment, it is important that consumers have access to as many advisers as possible.”
