The regulator made the statement in its regulated fees and levies CP21/8 paper published today.
The FCA has come under significant criticism from across the mortgage market as brokers are facing massive bills to cover FSCS compensation costs for failures in the investment and pension sectors.
Mortgage brokers will pay a collective £22.9m towards the more than £1bn FSCS levy in 2021-22, more than seven times the £3m total they contributed during the last financial year.
Fairer system to incentivise good outcomes
Critics claim it is unfair that other sectors, such as mortgage advisers, have to pick up the pieces from those that have been causing liabilities, and that the regulator should have been better in its oversight duties.
“We have acknowledged that the current cost of the FSCS levy for certain firms is too high, especially at a challenging time for all businesses,” the FCA said.
“We are proactively taking action to tackle increasing regulatory costs through a stronger focus on firms and individuals who do not meet the required standards.
“This includes a firmer approach to firms applying for authorisation and making better use of data and intelligence to identify harm caused by authorised firms.
“In the specific area of consumer investments we are aiming to reduce the harm which consumers can suffer with a view to, in turn, reducing the redress liabilities which can give rise to FSCS claims in the longer term.”
And it added that the funding system was not suitable.
“We also want to work towards a system where firms which cause redress liabilities end up paying more of the bill before recourse is needed to the FSCS,” the FCA continued.
“This would be fairer and would further incentivise firms to achieve good outcomes for consumers. It would benefit firms of all sizes.”