Mortgage adviser FCA bills will be ‘significantly less’ as high-profit firms shoulder burden

Mortgage adviser FCA bills will be ‘significantly less’ as high-profit firms shoulder burden


The FCA’s regulated fees and levies paper published today proposed that the rate of fees paid by firms in the A.18 home finance providers, advisers and arrangers block, earning more than £100,000, will reduce to £10.072 per thousand or part thousand pounds of annual income, down from £11.337. 

A reduction has been made to the money advice levy as well, as the fee charged to mortgage advisers will drop from 17.7p per thousand pounds of annual income to 13.5p. 

Rob Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI), said the higher overall levy against the lower individual fee was down to mortgage firms seeing an increase in turnover. 

Sinclair said turnover in the mortgage sector had risen by around eight per cent since last year and added: “Firms who have been successful will continue to pay more while the less successful firms will pay less. This makes it a bit fairer.” 

“I always worry about the overall level of FCA, FSCS [Financial Services Compensation Scheme] and FOS [Financial Ombudsman] fees, but the good news for mortgage firms is that their invoice this year will be significantly less than last year. The FSCS costs are lower, FOS will be slightly up and broadly speaking, the FCA levy will be down for smaller firms because they’ve consolidated the consumer credit fee into the minimum fee.  

“They’ve not swung the axe at the mortgage world, but other sectors will be hit. We’re still concerned about where we are with things like crypto and funeral homes where we’re being asked to pick up the initial costs to bring these firms into regulation, but they’ve got to get the money from somewhere and those firms can’t always afford to pay it upfront,” he added. 

Mortgage intermediaries have been excluded from contributing towards the recovery of crypto asset costs and responses to the FCA’s consultation pointed out that they are not subject to money laundering regulations. 


AR fee revision

Other feedback to the regulator’s consultation related to the increase in annual funding requirement (AFR) fees for appointed representatives (ARs). 

The FCA said there were three comments on the proposed rates for ARs which argued that increases were “unacceptably high”. 

In the regulator’s consultation paper which was published in April, it suggested raising the levy by 14.8 per cent to £287 per AR firm. 

Other feedback stated that the nearly 15 per cent hike had been “sneaked in” to the paper without comment while another said the FCA board minutes for 24 March did not mention the rise, suggesting the board was not aware of it. 

Another response said the increase had been “dropped into the consultation paper without any context”, which displayed a lack of transparency particularly because the fee applies retrospectively from 1 April. 

The regulator responded, saying the AFR for this block was increased by 7.9 per cent after accounting for inflation and AR contributions to wider regulatory costs. It said rates had been further “pushed beyond that” to nearly 15 per cent because of an 11 per cent reduction in the number of AR firms. The regulator said this would not have affected the total recovered but affected the distribution of costs between fee-payers. 

After considering the feedback received, the FCA has decided to treat AR fees the same way it treats other flat rates. Also taking inflation into account, it has now proposed that each AR firm pays £266 instead. 

Sinclair welcomed the halving of the AR levy increase, saying the regulator “reduced it from the excessive, gross levels that they were”. 

He also said he was waiting for the FCA and Treasury’s review into ARs in Q3 this year as “that will help us to see exactly what they think they need to do and why they need money. That will be useful if we can see more of the detail.” 

Rob Clifford, chief executive of Stonebridge, said following the consultation, there had been movement from the regulator, as expected.

He added: “However, there is a rather large caveat here. There was the suggestion in April that the FCA would, following feedback and criticism, adopt a fallback position, giving the impression these increased fees were a ‘good deal’ for practitioners, when the facts appear to be that they are still significantly above last year’s rates. Hence, fees for network principals like ourselves are now £266 per AR firm, having been marginally reduced from the proposed £287 in April. However, they continue to significantly rise year-on-year. One saving grace for hundreds of broker firms is that we do not typically pass FCA fees onto our members – we absorb them, as a reward for loyalty.

“I’m aware that Robert Sinclair at AMI, and other industry commentators, rightly dismiss the assumption that mortgage and protection brokers can continue to pay more each and every year. The ‘regulatory dividend’ that has been promised since statutory regulation was introduced still seems highly questionable, yet the FCA’s running costs never abate. It means that honest and diligent mortgage brokers pay more every year, which is somewhat baffling given that our sector is known to be exceedingly low-risk.”

The total proposed levy for AR firms for 2022/2023 is £7.1m, a fall from £7.2m. 

The FCA said it was reviewing its long-term funding arrangements for developing policy towards ARs, ongoing regulation and enforcement where it expects to “intensify activity” in line with its published business plan and strategy. It will review options for cost recovery in the fees policy consultation paper which will be published in November. 

The number of AR firms is estimated to have stayed flat on 2021/2022’s figure of 3,266, while the number of mortgage advice firms is estimated to have decreased by 1.5 per cent to 5,578. 

A flat fee levy of £85 is also payable to the Financial Ombudsman Service. 

Mortgage Intelligence collaborates with Mortgage Brain on sourcing platform

Mortgage Intelligence collaborates with Mortgage Brain on sourcing platform


This is an updated version of the existing Mortgage Brain Anywhere and will include features such as enhanced search filters, increased speed and usability and, access to Hometrack’s recently launched automated valuation model (AVM) plugin. 

The mortgage network and club will migrate its network members onto the system on 16 May as well as provide training and support during the transition. 

Later this year, the firms will work together to develop a customer relationship management (CRM) system and will consult with advisers to assist in the making of it. 

Sally Laker (pictured), managing director of Mortgage Intelligence, said: “This is an exciting step forward in terms of technology which our members have access to.  

“Our mission is for our members to be ahead of the curve in terms of technology, which is why we’ve been working very closely with Mortgage Brain to ensure that this new system and future Mortgage Brain software creates a comprehensive one-stop solution for our members’ digital needs.” 

Neil Wyatt, sales and marketing director of Mortgage Brain, added: “Collaborating with Mortgage Intelligence, listening to broker feedback and analysing data insights has helped us to capture and refine the most efficient digital journey for brokers.  

“Our roadmap for the next 12 months will provide advisers with the technology to help transform their business and we are excited that Sally and the team at Mortgage Intelligence are helping us shape the future.” 

Protection has to be personal – Stonebridge

Protection has to be personal – Stonebridge


Talk to consumers about protection and they are just as likely to think about personal protection against physical harm, or protection against disease. We’re all acutely aware of that in Covid times. 

So, knowing there is clearly a lack of consumer understanding here about what ‘protection’ is in our terms, it’s advisers who have to be the ones that impart the knowledge about what it could mean for clients and the ‘protection’ it affords. 

How best to do that? At our recent annual conference, we had a presentation from David Jones, sales director at Legal and General on this very topic, and it really brought home to me how important the ‘personal’ is when it comes to any discussion of ‘protection’. 


The personal touch 

For instance, as a differentiator, I too spoke a little about protection to our appointed representative (AR) firms, but I couched it in terms of income lost, in terms of the number of mortgages written which have no protection element to them. To advisory firms I wanted to highlight the missed opportunity in terms of the bottom line. 

But, when it comes to protection, advising on it, dealing with mortgage clients who are thinking about a new home or refinance rather than protection, we have to take it back to the personal. 

David clearly highlighted this in a short video – and I hope I’m not stealing his presentation thunder – but it was a powerful reminder of just who we’re protecting and the difference it can make, not just to the individual but the entire family unit.  

Bringing it back to the personal is incredibly thought-provoking and, I suspect, can make all the difference in terms of how you approach the personal protection needs of your client and their family. 

David asked a number of pertinent questions here: What if you woke up and your world had changed? What if you couldn’t work again? What position would you be in? Would you be able to pay your mortgage? Would you be able to pay all your bills? If not, what would it mean to your life? 

Some simple questions, but David also asked those in the room to then ask the same question of the last 10 clients they’d advised. How many of those 10 clients had sufficient protection in place to be able to cope with such a situation?

It was a real eye-opener and I suspect every adviser in that room was carrying out some mental gymnastics there and then. Thinking about the clients they had advised who had no, or insufficient, protection in place. Who, for whatever reason and through no fault of their own, would struggle to deal with their financial situation should something bad befall them. 


Assess your client base 

Look at the clients on your system right now.  

Think of those you’ve advised just since the start of the year. Many firms take protection incredibly seriously, but many do not.  

In our line of work, it’s possible that you could make a real difference to many, many individuals who later in life may have much to thank you for because you took the time to talk about protection with them, to make them understand what it could do for them personally, and to give them confidence to take out policies that they would eventually come to rely upon. 

How would that make you feel and how would it make them feel? There are so many ways to ensure your client, at the very least, has a protection conversation. Make it personal to you, and I suspect you’ll be more than willing to choose a route that ensures they know exactly what protection means.

TMA hires four specialist area supervision managers

TMA hires four specialist area supervision managers

TMA has appointed Alison Stidolph, Paul Walton, Roger Holmes and Sara McKenna. The team collectively brings regulatory experience of more than 100 years. They will help TMA support their DA firms with compliance matters.

Stidolph previously worked for Lloyds Banking Group for more than 26 years and later joined a local estate agents broker team in the North East as a compliance manager.

Walton also started his career at Lloyds, and has 35 years’ experience, including setting up an appointed representative (AR) firm for three years with First Complete.

Holmes joined from Halifax Bank, where he worked as a mortgage adviser, branch manager and area mortgage manager.

McKenna has been in the mortgage industry for 19 years. Her experience includes compliance management for a DA firm based in Surrey, where she managed the Financial Conduct Authority (FCA) register and complaints, and implemented controls for the firm.

The new compliance team’s services are wide ranging and can be tailored to each DA business around the specifics of the firm’s conduct of business and oversight.

Their main focus is to work with the DA business principal to discuss and explore the firm’s current position detailing relevant controls, systems and structures, with a plan that should be reviewed annually to keep an eye on any changes in the firm’s circumstances and objectives, or any risks identified.

It will identify current business practices which need intervention, resolution or mitigation in order to meet FCA expectations for advice.

The plan will require ‘buy in’ by the business principal to ensure that agreed procedures are followed, so that risks can be safely mitigated.

TMA will continue to offer file checking, themed regulatory workshops, support with DA authorisation, complaints handling and guidance documentation on retail mediation activities return (RMAR) completion.

Lisa Martin, DA development director at TMA (pictured), said: “With heightened regulatory focus on consumer duty, vulnerable customers and general insurance pricing coupled with increased global threat of ransomware, TMA believe DA firms will hugely benefit from the support we offer, provided by subject matter experts from within our wider network of Primis.

“We want to support firms in keeping their businesses safe and resilient, whilst they focus their attention on supporting and serving their customers with financial advice reviews and requirements.”

All the pictures from the 2022 Stonebridge national conference

All the pictures from the 2022 Stonebridge national conference

The event returned after a hiatus in last year under the theme ‘Empowering success through valued relationships’.

David Smith, economics editor of The Sunday Times, Tim Bannister, director at Rightmove Data Services, and Chris Pearson, head of intermediary mortgages at Hsbc UK, presented on the day to discuss the trends and outlook for the property and mortgage markets.

Former Wales and British and Irish Lions rugby captain, Gareth Thomas, was the keynote speaker and he shared his experiences on the challenges he faced as the first openly gay man in the sport.

See the pictures of the event below:


Upping the notice period when product pricing shifts – Carrasco

Upping the notice period when product pricing shifts – Carrasco

This wasn’t surprising in itself because I’m fully aware of the quality and robustness of the propositions represented, but given some of the mood music being played around the property market at present, particularly in terms of rising rates and the like, it was heartening to hear such positivity.

Essentially, these firms are incredibly positive about the mortgage market and what they intend to achieve this year. The suggestion was that January had started off relatively slowly for some, but as the weeks have passed, they have been dealing with an increasing level of enquiries which are now turning into applications and completions.

As you might expect, remortgage activity was tending to drive that business, but that’s not to say purchasing isn’t also solid. Evidently, supply remains the biggest issue here but the common sentiment focused on the homes that are coming to market selling in double-quick time.

Purchase demand still prevalent 

Perhaps this shows most clearly how the purchase demand that drove our market in 2021 hasn’t really gone away, and that even without any sort of stamp duty incentive – unless you’re a first-time buyer – this is still a market in which people want to buy and move.

Supply levels will of course determine just how much business is written, but it’s also true to say that rates, specifically rate movements, are likely to drive further remortgage activity. Especially given the direction of travel here is upwards.

At present, we are in a changeable situation with regards to rates. Historically, of course, we’re still at incredibly low levels. This is good news for the borrower as is the ultra-competitive market we have, the lending targets that have to be hit throughout the year and the anticipation that due to this, we may not see full rate increases being translated into product pricing.

Rising rate opportunities 

Upward rate movements can be used by advisers in terms of marketing activity to existing borrowers, particularly those most impacted by rises such as standard variable rate and tracker borrowers, and those who might be coming to the end of special rates.

In that sense, rate rises – bank base rate (BBR) or swaps – might not be the harbinger of doom some are making them out to be.

Of course, rate rises do often mean rate changes at a lender level. There were certain frustrations expressed at our forum, notably around the short notice periods some lenders are providing when changing rates and pulling products.

On that matter, we appreciate that BBR and swap rates do change and lenders have to react quickly, especially in certain areas where no lender wants to be the last one standing and inundated with business it can’t service.

Rate changes are part of the mortgage ‘game’ and it was clear from our adviser discussion that there are still plenty of opportunities to be secured from a rising environment, however long this might last.

Pricing shifts all the time, but advisers would certainly like to be forewarned and therefore forearmed as much as possible when lenders do make their moves, and they have to accept their own responsibility for managing client expectations in that regard.

MSS acquires major stake in Connect IFA

MSS acquires major stake in Connect IFA

The deal, which is subject to regulatory approval, will bring the number of mortgage advisers supported by MSS to over 1,450.

MSS Group, which is also the parent company of mortgage network Stonebridge, said the investment would enhance Connect’s financial strength and give it the ability to develop its proposition as it continues to increase its UK footprint.

Connect has over 250 appointed representative (AR) advisers, a number it expected to increase.

Connect said the MSS investment, and the existing companies in its group working closely together, would deliver greater scale and influence across the lending, insurance and surveying sectors.

Liz Syms chief executive, Kevin Thomson, sales director and Jane Benjamin, director of mortgages will all remain in place as the Connect senior leadership team. MSS representatives will join the Connect board in a non-executive capacity.

Liz Syms (pictured), chief executive of Connect, said: “This marks the next step in the evolution of Connect and will enhance our position as a major player in the specialist mortgage network market. The operations of both groups overlap without competing and by working together we will be able to secure additional benefits and operating efficiencies.

“We are really looking forward to working with the MSS team who have an impressive background in supporting business growth. The financial stability and logistical support provided by MSS will enable us to further develop our already market-leading proposition in order that we are able to continue the significant growth we have achieved over the past two years.”

Rob Clifford, chief commercial executive at MSS Group and chief executive at Stonebridge, added: “Liz Syms and her team have done a hugely impressive job of building a fantastic business at Connect and one which we have admired for some years – we are really looking forward to working with them to help support their growth plans.

“MSS already has extensive relationships with mortgage lenders as a surveying and valuations partner and we intend to extend the group’s reach in terms of aggregating mortgage lending and building deeper relationships with those lenders.

Network technology has to deliver AR efficiencies

Network technology has to deliver AR efficiencies


However, technology for technology’s sake can be a problem as well. Some networks can sell potential AR firms a system which on the surface looks like it has all the bells and whistles, but in reality offers very little. ARs must be fully aware of this when weighing up any network decision.

This should all be about the tangible benefits – not the parts of a system which are never going to deliver anything for the adviser or firm, but those that provide real efficiencies, that make the adviser’s job easier, and add up to provide the saving of resource cost and deliver additional income.

From my point of view, that focus should essentially all be about adviser productivity. How much more efficient can an upgrade to our system make you? What about a new portal? Where is the time-saving in using sourcing system A and its elements over sourcing system B?

At its core level, how many more cases can you do as a result of using the technology we provide to you? Years ago, without the quality of the technology advisers have at their disposal now, carrying out a handful of cases a week made you an efficient adviser.

But that’s not the case now and nor should it be. So, we are trying to develop the technology we offer AR firms to provide continual marginal gains.

A customer-facing portal that allows the customer to check on the status of the case, we believe saves one of our AR advisers at least one hour a day, primarily because they’re not having to field calls and emails from that client asking them for an update. They can see it right in front of them on the portal.

ID verification also used to be a highly labour-intensive part of an adviser’s case work as did re-keying data and information which has often been described as the bane of most advisers’ lives. Especially when it comes to producing multiple DIPs. But thanks to developments in technology, advisers can now save on average 15-20 minutes of re-keying time.

Add that up across the large number of cases most advisers will be working on, and you can clearly see the time-benefit for advisers in having access to this technology and using all that it offers. Provide further functionality like criteria and affordability hubs, where advisers can quickly get to the products that meet their client’s requirements and swerve lenders with poor service levels, and you’re saving both time for you and the client.

Not forgetting there’s the systems and tech functions that are available for protection, general insurance or conveyancing work, which again will all shave much-needed time off what was previously required to complete it.

These are the benchmarks AR firms and their advisers should be using when looking at the network technology offering. What efficiencies can it deliver and what time and cost can it save? Choose on this basis and you won’t go far wrong.

Openwork completes record £5.7bn mortgages in Q1

Openwork completes record £5.7bn mortgages in Q1


This comes amid the addition of 245 mortgage and protection advisers to its cohort over the period.  

This includes Andrews Property Group, which joined Openwork last month and took its total number of mortgage and protection advisers to 2,500. 

A further 46 appointed representative firms and 337 advisers are also set to join Openwork in the coming months. 

The group’s record completions also follows its three per cent rise in total mortgage completions last year, which hit £19bn. 

John Cupis, managing director, mortgages and protection, at The Openwork Partnership, said: “The record first quarter for mortgage completions puts us on course for another strong year with the stamp duty holiday and mortgage guarantee scheme providing a boost for business.   

“The mortgage business at The Openwork Partnership is really benefiting from the growth in recruitment and the addition of new firms and advisers who are helping to drive expansion.”  

Stephen Wildgoose, recruitment and growth director at The Openwork Partnership, said: “Our recruitment results in 2020 and moving into 2021 have been incredibly strong.   

“In an ever-changing landscape professional advisers who have an appetite to grow their business, expand their qualifications and broaden their offering to clients are increasingly turning to The Openwork Partnership.”    

AR fees will result in more costs and red tape for rule-abiding firms – Star Letter 23/04/2021

AR fees will result in more costs and red tape for rule-abiding firms – Star Letter 23/04/2021


The first comment was to the story: FCA announces £10m fee for networks to tackle AR oversight failures 

Paul Smulovitch said: “For the average appointed representative who represents no risk and follows rules diligently, this is just more cost and likely to be even more red tape when time is already precious. 


Facing keyboard warriors’ 

The second comment came from Andy Wilson, under the article: Banter and bullying or community and kindness: five brokers open up about life on social media 

Wilson said: “I post quite heavily on LinkedIn, and occasionally on my own Facebook business page, but Twitter has for me fallen a bit by the wayside. 

However, there are a lot of companies advertising for equity release on Facebook, and many of them are lead generation companies for equity release products.

He added: “Almost inevitably, there will be anything up to 100 or more posts which are knee-jerk reactions from people who clearly do not understand the modern products, with flexible features and benefits.  

“’Don’t do it and its a con they cry. So, I challenge them. Why do you feel like that? or what makes you say that?. 

Wilson said: “Those who bother to reply, and who aren’t simply keyboard warriors posting for a jolly, do state their arguments about it, but they are nearly always related to old non-regulated products with high exit charges, and bear no relation to the lifetime mortgages of today.  

I try to educate and explain, but it is an uphill struggle with some. Some are violently opposed.  

He added: One poster was so incensed by the fact that I, as an adviser, had dared to challenge the seemingly popular view that all those involved with equity release should be hung, drawn and quartered, and even went so far as to post personal attacks on me, including a statement that he grouped me in with child molesters and paedophiles 

My wife was horrified, but I simply reported the posts to Facebook and within 20 minutes they had deleted his posts and issued a warning. 

Wilson concluded: “Social media can be an offensive place. You just need to keep everything very polite and professional, and eventually some will realise you may actually be worth talking to after all.