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Mortgage advisers’ FSCS fees revealed

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  • 12/04/2017
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Mortgage advisers’ FSCS fees revealed
Mortgage brokers will pay £14m in levy to the Financial Services Compensation Scheme (FSCS) for 2017-18.

However, those who sell protection products such as life insurance face paying their share of the £147m bill for advisers in the life and pensions class.

FSCS chief executive Mark Neale warned that the regulator would initially raise a levy of £100m in this sector but could then raise a supplementary levy depending on claims throughout the year.

TMA Mortgage Club has been campaigning for the FSCS to change how mortgage brokers are treated under the levy – arguing the current system is unfair.

Under the current system, advisers are billed for the estimated amount of compensation required for a class of products which they are responsible for giving advice for.

However, life insurance has been placed in the same class as pensions, which means that when bad pension advice is given mortgage brokers who sell life cover have to pay up.

An FSCS consultation on restructuring the levy closed on 31 March.

 

Unchanged levy

Brokers in the Home Finance Intermediation class will see their contribution unchanged.

“Although we had levied in January for an unexpected spike in claims on this class, these were attributable to one particular failure and do not appear to represent a trend,” the FSCS said.

The Life and Pension Intermediation levy has decreased by £24m from the indicative forecast published in January.

The FSCS said this was largely because of a lower average compensation cost for Self-Invested Personal Pension (SIPP)-related claims.

“Approximately 93% of the costs in this class are for SIPP-related claims and the forecast average claim value has reduced from £36,000 to £32,000,” it said.

“The forecast costs for the sector in 2017/18 are now expected to be £146m, which is £17m below the indicative figure of £163m. The costs for 2016/17 have decreased by £9m since the supplementary levy was calculated for the same reason,” it added.

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