Regulation under the Financial Services Authority (FSA) will cost intermediaries around 10% of their turnover, according to network Mortgage Intelligence (MI).
MI has become one of the first networks to detail its full plans and costs for brokers under its three options Spirit, Vantage and Elan.
Spirit will cater for intermediaries who want to act as appointed representatives and leave the compliance and regulatory issues to MI. Vantage is aimed at brokers who will be directly regulated by the FSA, but want to use the support service that MI can offer. Elan will offer directly regulated brokers access to the MI network, without IT training and regulatory services.
There will be an application fee of £100 and monthly costs for Spirit members of £100 per firm and £50 per adviser. This will drop to £60 and £30 for Vantage members. Elan members will not be charged for using the MI network.
Until October 2004, Spirit members will also pay between 7% and 9% of their turnover, with this increasing to between 8% and 10% from November 2004. Professional indemnity (PI) insurance will cost Spirit members up to a further 2% of turnover. For Vantage members, MI will look for between 6% and 8% of turnover on top of the monthly charges, with PI not being provided.
Sally Laker, managing director of MI accepted brokers may be alarmed by the headline figures, but urged them to undertake their own detailed study into regulatory costs.
She said: ‘Brokers have to find out all the information and calculate the cost. They can call us and we will explain what they need to calculate.’ She warned brokers: ‘Do not believe that all it will cost to become directly authorised is the fee structure that has been shown ‘ there are ongoing costs.’
In detailing the plans, Laker accepted there may be surprises to come from the FSA when it finalises the rules, but felt enough was known to put a stake in the ground. She concluded: ‘If something was to change drastically we would look at the proposition and make changes if necessary. At the moment I feel comfortable with the figures.’