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AMI concern at new FCA costs

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  • 09/04/2013
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AMI concern at new FCA costs
The Association of Mortgage Intermediaries has expressed concern at the increase in costs under the new regulatory regime.

The annual costs of regulation will rise to £646m under the FCA and PRA, this is a 15% rise on the £560m funding the FSA received in 2012/13.

AMI said that firms would bare an additional cost because of the loss of off-set financial penalties, increasing the amount to be funded by firms to 24%.

However, the new regulator will retain a gross minimum fee for firms of £1,000.

Robert Sinclair, chief executive of AMI, commented: “The commitment to maintain minimum fees at £1,000 for all directly authorised smaller firms is welcome news. Indeed with the fall in the FSCS levies, the bill for the smallest firms will be much lower than last year.

“However this should not mask significant increases in the direct costs of the regulator and massive increases for larger firms.

“Indeed the FCA bill for all but the smallest firms holding mortgage and general insurance permissions will increase by around 50% versus last years’ FSA invoice. For the very few firms who are dual regulated, the increases will be even greater.

“The only saving grace is that the invoices that will land in July will be smaller than last year. This is because the levies for the Compensation Scheme are much less than last year.”

Sinclair added that the trade body would seek to curb any future rises in regulation costs.

“Whilst some might feel that the new FCA has been saved by the FSCS, I would counsel caution as the continual upward trend in the cost of our regulators must be stopped and a cap put on their funding,” he said.

“They must learn to prioritise and allocate resources accordingly, as they would require the firms they monitor to do.

“AMI will be responding vigorously to this consultation. As the regulator appears to have the funding they need, they must be held to account to perform better in protecting consumers and all good firms from those that continue to do damage to our industry.

“The proposals to review the funding arrangements will give us the opportunity to establish if there might be a fairer way to pay. The mortgage intermediary community presents a very limited systemic risk, which is indemnified by our commitment to FOS and the FSCS. A fairer deal for firms that present the lowest risk is an avenue we need to consider. We need to ensure great value for our hard earned money”

AMI has also published research which compared the fees paid by small and large firms in 2005/06, 2012/13 and the proposed levies for 2013/14:

FCA fees and levies

A small firm with £50k Mortgage and £30k insurance income

Regulatory Fees and Levies: 2005/2006 (final)

Financial Services Authority Periodic Fee: £750.00
Financial Services Compensation Scheme Levy: £20.44
Financial Ombudsman Service Levy: £100.00
Total Fee £870.44

Regulatory Fees and Levies: 2012/2013 (final)

Financial Services Authority Periodic Fee: £988.00
Money Advice Service Periodic Fee: £10.00
Financial Services Compensation Scheme Levy: £711.77
Financial Ombudsman Service Levy: £145.00
Total Fee £1,854.77

Regulatory Fees and Levies: 2013/2014 (proposed)

Financial Conduct Authority Periodic Fee: £1,000.00
Prudential Regulation Authority Periodic Fee: £0.00
Money Advice Service Periodic Fee: £10.00
Financial Services Compensation Scheme Levy: £243.07
Financial Ombudsman Service Levy: £170.00
Total Fee £1,423.07

A larger firm with £2m Mortgage and £1m insurance income

Regulatory Fees and Levies: 2005/2006 (final)

Financial Services Authority Periodic Fee: £14,018.00
Financial Services Compensation Scheme Levy: £535.65
Financial Ombudsman Service Levy: £100.00
Total Fee £14,653.65

Regulatory Fees and Levies: 2012/2013 (final)

Financial Services Authority Periodic Fee: £22,849.20
Money Advice Service Periodic Fee: £3,407.10
Financial Services Compensation Scheme Levy: £24,909.70
Financial Ombudsman Service Levy: £422.00
Total Fee £51,588.00

Regulatory Fees and Levies: 2013/2014 (proposed)

Financial Conduct Authority Periodic Fee: £34,029.05
Prudential Regulation Authority Periodic Fee: £0.00
Money Advice Service Periodic Fee: £2,448.50
Financial Services Compensation Scheme Levy: £7,973.04
Financial Ombudsman Service Levy: £502.80
Total Fee £44,953.39

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