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Mortgage brokers welcome reduction in FSCS fees

Mortgage brokers welcome reduction in FSCS fees

The Association of Mortgage Intermediaries (AMI) has welcomed the reduction in FSCS fees for firms during the pandemic.

The levy payable by firms within the home finance intermediation class has decreased by £2m to £1m, according to an industry newsletter from the Financial Services Compensation Scheme (FSCS) in May.

Robert Sinclair, chief executive of AMI, said: “AMI welcomes the reduction in FSCS fee costs for firms in the midst of this pandemic and at a time when capital resources are more challenging for firms.

"We regret that firms with invoices over £10k will have to pay within 30 days, but are supportive that smaller firms will have 90 days to pay."

But he added: “Whilst delighted that firms will not see a real increase in their total fees and levies costs this year, we remain acutely aware of the challenges faced by firms and the interrelation between capital adequacy requirements, PII, FOS and the FSCS costs.”

Last week (July 2) the FCA revealed it had no plans to revisit the funding structure of the Financial Services Compensation Scheme, despite its chairman warning the system needed a restructure last month.

In its policy statement the regulator also denied calls to grant larger advice firms, which pay more than £10,000 in annual fees, a payment extension on this year's regulatory bill despite coronavirus pressures.

This was after it said in April it would extend the timeframe in which medium and smaller firms could pay their regulatory fees this year by two months to 90 days, so that the majority (89 per cent) of firms will have until the end of 2020 to pay their fees and levies.

The FCA has categorised medium and smaller firms as those who pay a total fees and levies in 2020-21 of less than £10,000.

Mr Sinclair also said: “I was heartened to hear Charles Randell’s statement that they needed to redesign the system to ensure that polluting firms in the financial sector pay, not those who have behaved well.

"AMI will continue to work to hold the FCA to account and ensure that intermediary fees are proportionate to the risks posed.”

Last month FCA chairman Charles Randell warned that the already "unacceptable" levy was likely to increase as a result of the coronavirus crisis.

Mr Randell said the system needed to be redesigned so "polluting firms" in the financial sector paid the bill for high risk and unsuitable investments, not "well-run firms" via the compensation scheme.

chloe.cheung@ft.com and rachel.mortimer@ft.com