Aimed at levelling the loopholes in assigning the correct size to companies in the run up to regulation, the Financial Services Authority (FSA) has released CP192, to ensure consistent treatment between firms selling their own products and ‘pure’ intermediaries.
The paper will only affect a small number of intermediary firms who receive payment from providers in a form other than straightforward commission or fees; and insurers, mortgage lenders and administrators who act as intermediaries.
In these cases the FSA’s proposed income measures outlined in CP180 would not accurately reflect the size of the firm’s business.
James Mayne, director of compliance services at consultancy firm Competent Adviser, said: ‘CP180 set out a fee structure based on income, and CP192 picks up the loopholes, such as intermediary firms owned by lenders, not paid in fees or commission by their parent company.’
Where a lender or insurer advises on or arranges its own products a notional commission is proposed, by multiplying business volume by a factor of 0.5% for lending and 10% for insurance.
Intermediaries not paid in terms of commission and fees would have the same factors applied to business generated. In both cases the result would determine a firm’s initial application fee and periodic fees under the FSA’s regulation.