Mortgage brokers see FSCS levy forecast cut by half

Mortgage brokers see FSCS levy forecast cut by half

Mortgage brokers have seen the levy they must pay to the Financial Services Compensation Scheme (FSCS) for 2021/22 fall by £11.5m.

As part of its outlook, published today (May 13), the FSCS said the levies the home finance intermediation class — covering mortgage advice — is expected to pay has fallen from £23m to £11.5m.

But this is still four times as much as they paid last year.

The fall was due to the FSCS expecting fewer firms to fail in this class than forecast in January and a £9m reduction in this class’s retail pool contribution.

Back in January, the mortgage profession criticised the FSCS levy after it was told brokers would be charged £23m towards the levy — more than seven times the £3m they were charged last year.

The Association of Mortgage Intermediaries (AMI) said brokers should not be asked to pay for “bad pensions and investment advice".

Overall, the FSCS announced this morning it has reduced its levy for 2021/22 by more than £200m to £833m, as it expects firm failures and some claims to be delayed over the next few years.

The lifeboat scheme had forecast its levy for the year to be £1.04bn, which was a 48 per cent jump on last year’s total.

Tim Fassam, director of government relations and policy at Pimfa said while this was good news for firms, the total figure was still too high, with predictions that claims resulting from failed self invested personal pensions will be felt next year being “of little comfort to our firms”.

Fassam said: “We have set out a roadmap towards lower levies in the long term and are urging government and the regulator to work with us and the rest of industry to create a sustainable solution, which ensures that future levy costs, individual failures and ultimately poor consumer outcomes are consigned to history.”

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