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Brokers express frustration after being hit with ‘surprise’ FSCS levy

  • 03/02/2017
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Brokers have voiced consternation after receiving a bill from the Financial Services Compensation Scheme (FSCS) and given just weeks to pay.

The letter asks that brokers pay the bill, reaching up to thousands of pounds for some, dependent on the brokerage, within 30 days or risk being charged additional fees and interest. Brokers are given the option to pay the fee by instalments through an instalment finance provider.

According to brokers, the £15m emergency levy was “a surprise” just weeks after paying the initial charge to the FSCS.

Last month, the FSCS confirmed it was raising a supplementary levy against home finance intermediaries citing a risk that the £40m annual limit could be exceeded if carried over into 2017/18.

When announcing the emergency fee, Mark Neale, chief executive of FSCS, said the levy had been introduced “due largely to the failure of one particular firm that gave bad advice to engage in risky property investments alongside mortgage advice.”

Martin Stewart, director of London Money, said it was not just smaller firms that would be hit hard by the bill.

“It’s a big blow for any business because the bigger the business the bigger the fee. While you can pay it monthly on credit, it doesn’t matter if you’ve got one broker or 20 brokers, it was a letter out of the blue and it’s painful to have to pay anything on top of what we’re already paying,” he said.

“I’m very supportive of the regulator and I think it’s there for the right reasons but I think it seems a little bit unfair that it’s quite a big interim levy all because of the wrongdoing of one firm.”

Scott Thorpe, director at Access 4 Finance, said the fee came as a “big surprise” particularly as a second charge packager which is new to dealing with the regulator.

“No one was really expecting it so soon after the last bill. That said, the benefits to the second charge industry of becoming regulated far outweighs the incurred cost.

“I do think though we need to create a 21st century committee/board who can help communicate this kind of stuff better with the FCA, particularly for those it affects most like the one and two man bands who are the lifeblood of our industries. I’d like to see the regulator stem the tide of bad firms operating at the expense of the good guys but appreciate that must feel like being a painter on the Forth Bridge.”

However, Mark Dyason, owner of Edinburgh Mortgage Advice, said that the fee was “the price of being in business”.

“Whilst it is unpleasant, costly and I have sympathy with those who point out that the many are paying for the few, it is however my view that this is the price of being in business. I also trust trade bodies such as the Association of Mortgage Intermediaries to fight our corner on this and we need to support them in this.”

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