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Mortgage brokers’ FSCS levy drops 80% to £4m

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  • 31/01/2019
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Mortgage brokers’ FSCS levy drops 80% to £4m
Mortgage brokers will be contributing just £4m towards the Financial Services Compensation Scheme (FSCS) budget for the 2019/20 financial year.

 

The total is a sharp fall from the £22m brokers coughed-up in 2018-19 and it includes £1m from lenders as their contribution towards broker fees is introduced for the first time.

According to the regulator’s plan and budget for 2019/20, it is expecting home finance related claims to return to recent normal levels after a spike during an “exceptional” last year for the industry.

Compensation limits will also change within the home finance intermediation class in the coming financial year, rising to £85,000 from £50,000.

These new limits will only apply to claims relating to failures declared in default after 1 April 2019, rather than claims relating to failures declared in default prior to that date.

The FSCS said it will be launching a communications campaign to explain these changes to consumers in the coming months.

 

£70m provider contribution

Overall, the regulator has increased its levies to £516m in the coming year, up from £468m in the nine-month year of 2018/19.

The change from a nine- to a twelve-month period is the main reason for the increase in the levy from the previous year.

If the 2018/19 levy had been for a twelve-month year, then it would have been £574m – £58m higher than the proposed 2019/20 levy, the FSCS noted.

In total providers across the financial industry will be contributing £70m to the direct costs of FSCS levies for advisers and other intermediaries.

This was introduced after a long campaign by adviser representatives and trade bodies which they hope will just be a “starting point”.

 

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