In April, the Financial Services Compensation Scheme (FSCS) announced its levy for 2015/16 as £32m higher than the amount budgeted for in January.
While Directly Authorised brokers will have to account for the increase in fees themselves, appointed representative (AR) firms will feel the extra cost should their network decide to hike fees as a result.
Last month, Personal Touch Financial Services director David Carrington criticised the FSCS levy after the surge in costs led the network to ramp up fees paid by its ARs from 1 October.
A recent poll conducted by Mortgage Solutions revealed that over 85% of respondents think their business has been negatively impacted by rising fees.
DA broker Mark Dyason, director of Edinburgh Mortgage Advice, said: “Rising fees have been a serious part of our industry for some time, and aside from the conversation about if this can be justified, there is an impact on us and our customers.
“The fees we have to pay are part of the reason we charge a fee for our service and I monitor the level of regulatory fees and review what level my client needs to pay in reflection of this.”
Lea Karasavvas, managing director at Prolific Mortgage Finance, explained that due to the amount of regulation piled on the mortgage industry, costs paid by the broker were ‘obviously high’. He added that this was not just purely because of regulatory fees, but also the costs associated with ensuring the company is adhering to the required rules, particularly those brought about by the Mortgage Market Review (MMR).
“The MMR has made the role of a mortgage broker considerably more labour intensive and is one of the driving factors as to why the direct channel has lost out on business to the intermediary channel. The cost of training staff and the time required to meet the levels of regulation post-MMR was very demanding. Administration in this industry is probably more in demand than ever given the regulation now involved, and the volume of business going through the intermediary channel.”
He added: “While procuration fees have seen a slight increase of late, I believe this is why there is now a significant rise in the number of brokers charging fees and ultimately it is the consumer that is having to front the cost of the regulation.”
