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Mortgage brokers to net FCA penalty fees rebate but lender levy rises

  • 13/11/2017
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Mortgage brokers to net FCA penalty fees rebate but lender levy rises
Mortgage brokers could be set to benefit from fines collected from other firms by the Financial Conduct Authority (FCA).

However, lenders and other home finance administrators could see regulatory bills rise by £3m while brokers wanting paper invoices face an additional charge for the service.

The proposals all come as part of its CP17/38 Regulatory fees and levies consultation published today.


Penalty fee rebate

The regulator is proposing adding firms in the G20 and G21 Mortgage Credit Directive regulation classes to its Financial Penalty Scheme (FPS), which sees certain amounts of industry fines repaid to unpenalized firms.

“Under our FPS we apply retained penalties, received in any financial year, as a rebate to the periodic fees paid in the following financial year by firms in the fee-blocks set out,” it said.

“The total retained penalties from any financial year will be allocated across these fee-blocks in proportion to the allocation of the enforcement budgeted costs for the following financial year. This will target the benefit from retained penalties to the fee-blocks that are paying for enforcement costs.”

The FCA added that firms on which any penalty was imposed in a financial year will not receive any rebate to their periodic fees paid, for any retained penalties, in the following financial year.

The regulator will publish more details about the likely level of rebate in March and finalise this in June.


£3m levy increase

Despite the FCA saying it did “not propose to change the way firms in A.2 (Home finance providers and administrators’) are levied”, these firms will see a £3m increase in their share of the Money Advice Service debt advice levy.

From 2018/2019, the FCA’s plans will see Home finance providers and administrators’ (regulation block A.2) share of the bill rise to 50% from the current 44%.

This is likely to cost an additional £3m, taking the annual total to £24m.

The levy is calculated per £m of secured debt. In 2017/18 the levy was £16.50 per £m or part £m of secured debt. This is expected to rise to £18.39 in 2018/19.

“Our proposals align the funding of debt advice more closely with the actual lending firms do, but it will mean some firms will pay a larger levy than they do now,” the FCA said.

“We believe the new approach is fair to firms and better meets our policy intention that firms who provide secured and unsecured lending should fund the Money Advice Service debt advice work.

“We do not propose to change the way firms in A.2 are levied. Firms paying the money advice consumer credit levy will no longer contribute to funding debt advice,” it added.


Paper invoices

The FCA is also proposing a charge of between £50 and £100 per year for firms which wish to use paper invoices.

About 85% of authorised firms are registered and using online invoicing, leaving about 8,000 receiving paper invoices.

The regulator said paper invoices required an inefficient separate process and was expensive and time-consuming.

This included firms which were not online receiving other fees correspondence by post which also need to be manually recorded.

“These additional costs are carried by the whole body of fee-payers. We believe that firms wishing to preserve this manual service should pay for it, rather than expecting other firms to share the costs,” the FCA said.

“We estimate that a charge of £50 to £100 per year would cover our costs, but we will review the figures before consulting formally next year. The charge is likely to increase in the future as the number of firms receiving paper invoices declines and any economies of scale are eroded,” it added.


The consultation is accepting responses until 15 January, including via the online response form.

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