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AMI says FCA fees consultation reveals ‘serious disconnect’ with mortgage market

  • 28/04/2022
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AMI says FCA fees consultation reveals ‘serious disconnect’ with mortgage market
The Association of Mortgage Intermediaries (AMI) has lambasted the Financial Conduct Authority’s (FCA) second fees consultation, calling out the length of its consultation period, proposals around the appointed representative (AR) levy, increases to minimum fee and heightened charges to cover cryptocurrency.

AMI’s chief executive Robert Sinclair (pictured) said that whilst there was a “good three-year plan and business plan” there was still a “serious disconnect” with its approach to fees.

He called out the proposal to increase the AR levy on networks by 14.8 per cent, which he said had been hidden in the rules. The detail can be found on page 18 of its 101-page consultation paper.

The current levy is £250 for each AR firm a club or network has, and the consultation suggest increasing this to £287.

He said surcharging networks a further 14.8 per cent on ARs “for issues that exist in other markets, continues to cause us significant concern”.

Sinclair also criticised the significant rises to the minimum fee that will be implemented over the next two years and the flawed assumption that firms can pay for the FCA’s National Insurance increase via hiked up fees.

He also condemned the decision to charge mortgage brokers for new work for cryptocurrency, which is a “scope change” project by the regulator to bring select cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation of 2017.

“The assumption that mortgage broker customers can find the money to pay for the process to review and authorise cryptocurrency firms displays a total lack of appreciation of the thin margins that most brokers operate under,” he said.

Sinclair added that the five-week consultation period was inadequate, calling it the “shortest in memory”.

The consultation period for fees at the FCA opened on 7 April and is due to close 12 May.

The FCA fees consultation operates on an annual cycle with the regulator consulting on periodic fees rates, as well as changes to application fees or other fees, for the next financial year in March and April.

It also consults on the Financial Ombudsman Service (FOS) general levy, the Single Financial Guidance Body levies and illegal money-lending levies for the next financial year.

In its business plan, the FCA said it was making changes to “improve principals’ oversight of their ARs, increase the information they give us and raise standards across financial services”.

Sinclair continued: “I am infuriated by the arrogance of this new fees consultation. The impossibility for anyone to hold the FCA to account is becoming damaging to the industry.”

He added that the senior team at the FCA said they hoped to have more time to engage with the industry in 2022 than they had during the Covid crisis.

“It is to be hoped that there is enough of an industry left by then, as the increasing regulatory cost burden makes this a less attractive place to be,” he said.

“It is death by a thousand cuts, with increasing FOS fees, FSCS [Financial Services Compensation Scheme] costs, Consumer Duty and the raw cost of the FCA activity and fees. Good firms cannot just keep having an escalating bill.”


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