The FCA has proposed charging mortgage advisers £2,500 for applications to become regulated in the 2021-22 financial year, up from £1,500 in this year.
As part of the shake-up in its CP20-22 consultation, the regulator is proposing to create ten fee paying categories bringing together various fee blocks, along with two new transaction charges.
Mortgage and home finance mediation firms are joined in category four by investment, corporate finance, and general insurance intermediaries – with all paying a flat £2,500 fee.
The FCA’s new fees run from £250 for category one, to £200,000 for category ten.
Transaction charges
The regulator is also proposing to introduce two new transaction charges for when firms interact with it for changes in control (CiC) and for senior management regime applications.
When a business intends to gain or extend its control over an authorised person, it will be charge £500 from April 2021.
Senior management regime permission applications will be £250 and will apply to principal firms applying on behalf of appointed representatives (ARs).
Many unchanged since FSA
Explaining the overhaul the FCA said: “We have identified 83 FCA charges for applications.
“We believe that such a large number of different charges is confusing and may complicate our communication with prospective applicants.
“As well as revalorising the current fees, we propose to condense them into a simple table of ten pricing categories.”
Overall 49 of the charges have increased, 23 have stayed the same, and 11 have reduced.
It argued that many of its charges have not changed since the predecessor Financial Services Authority (FSA) set them nearly 20 years ago and over that time, their value has eroded, passing an increasing share of the processing costs to existing fee-payers through levies.
When the FSA first consulted on application fees in 2001 it envisaged that application fees would recover 50 per cent to 90 per cent of the costs of processing different permissions, with deposit takers paying the highest share, it added.
More transparent
According to the regulator, the total cost of authorisations in 2019 was £19.0m with application fees raising only £6.2m or 33 per cent of the cost.
The proposals would have raised the revenue from application fees to £12.8m in 2019, raising the cost recovery rate to 67 per cent, in the mid-range of the FSA’s original target – representing an increase in fee rates of 103 per cent.
The new transaction fees would have raised a further £2.8m in 2019, raising total cost recovery to £15.6m or 82 per cent.
“We believe that the simplified structure of application fees will help to make the costs of authorisation more transparent,” it added.
The consultation is open until 22 January 2021.
