In the Financial Conduct Authority’s (FCA) annual retail data bulletin, stripping out second charges, mortgage mediation revenue still showed a significant jump of 26% between 2016 and 2017 to £1.15bn.
The data from the Retail Mediation Activities Return suggested revenue for mortgage brokers has almost doubled over the past five years as a result of general market growth and the percentage of business transacted by brokers.
Growth in revenue from non-investment insurance mediation has been more modest – up 8% on 2016.
The profit slice
The report showed total reported earnings by mortgage brokers increased by 23% compared to 2016 to £1.2bn in 2017.
Insurance continues to play a large part in regulated revenues, particularly for larger firms. Total reported earnings by insurance intermediaries increased by 7% to £16.2bn year-on-year.
Including investment advisers, all UK retail advice firms paid over £300m in Professional Indemnity Insurance (PII) premiums in 2017.
According to the regulator, the average premium paid as a proportion of revenue earned from these three business activities was: 1% for mortgage brokers; 1.5% for insurance intermediaries; and 1.9% for financial advisers.
Smaller firms paid a higher proportion of their revenue as premium than larger firms.
Total reported earnings by financial advisers overall, including investment advisers, increased by 22% to £4.5bn in 2017 and aggregate pre-tax profits by 23% to £698m in 2017.