The Association of Mortgage Intermediaries has sounded a warning call over the fees that the Financial Conduct Authority plans to charge advisers for 2015/16, stating that it is considering if more focused industry action is required.
Earlier today FTAdviser reported that the regulator commenced its annual consultation on the fee rates it wishes to charge, with advisers being hit with the largest regulatory fee hike.
Ami complained that mortgage intermediary firms are already receiving interim invoices on this, together with interim Financial Services Compensation Scheme fee demands for pensions mis-selling, which will mean significant increases in costs for firms that will need to be passed on to consumers.
A straw poll by FTAdviser revealed that some advises are seeing an FSCS interim levy that amounts to a third of their total regulatory fees for last year.
Robert Sinclair, Ami chief executive, said that whilst the FCA are headlining an 8.5 per cent increase across the board, this is never quite how it plays out in practice.
“For the small broker who has paid the minimum fee of £1,000 for a number of years, this is to be increased to £1,084 and they will also have to pay a new levy to undertake consumer buy-to-let totalling £350 to include their Financial Ombudsman Scheme levy.
“On top of this, brokers have still to see clarity on whether or not they need a consumer credit permission to talk about some historic loans and mortgages raised for commercial purposes.”
He argued that this means the small broker will see their FCA fees rise by over 50 per cent per annum. “In a zero inflation world, with government committed to reducing bureaucratic costs, this is a travesty.”
The industry body called for the regulator to clearly justify to mortgage brokers the need for such increases when they carrying on the same business they have always done.
The Association of Professional Financial Advisers also came out against the fee hike, with its director general Chris Hannant, warning that the FCA needs to “get a grip”.
“Apfa’s 2014 report on regulatory costs indicates that direct and indirect regulatory costs represent around 15 per cent of the cost of financial advice.
“This is a significant cost to the consumer and reduces access to advice at a time that government reforms to pensions make affordable financial advice ever more important,” he added.
peter.walker@ft.com
