First published by Mortgage Solutions
When you describe something as ‘the worst day in your career’, you’re unlikely to be underplaying just how strongly you felt.
On reading these words from the Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair when describing the £1bn charge the FSCS intends to levy on the financial services industry, it’s safe to say this was a sit up and take notice moment.
Everyone in our industry will be acutely aware of what those proposals mean – a major increase in the regulatory fees payable by all mortgage advice businesses.
To illustrate this, last year the regular contribution to the FSCS levy for mortgage distribution, the category mortgage advisers fall under, was £1.5m; this year it is forecast to be £22.9m.
That’s a staggering 1,426 per cent year-on-year rise. Imagine trying to get that sort of price rise through in any other business – it would be considered obscene in the extreme, but yet in financial services regulation land, it’s deemed acceptable.
To put that into context, it means for Stonebridge alone, an unexpected increase in costs to over £1m in regulatory fees during the next financial year.
No business in the land can lie down and accept that massive hike in business costs, without considering how to mitigate the financial hit. For some brokers and networks that will mean a change to their charging structures for sure.
And all this extra cost to pay for previous and future issues in areas of the market most mortgage or protection advice firms have absolutely nothing to do with.
Seething with anger
It is no wonder many firms are seething with anger about the cost increase and what it is required for – to combat failings in the regulatory structure as a whole, and specifically in the pension and investment sectors.
Yet mortgage firms are expected to carry the financial can too. It would almost be comical if it wasn’t so serious.
I’m aware that Stonebridge is not the first firm or industry stakeholder to come out so vociferously against this increase. The reason we do this again is because we have the opportunity to do so – where many others do not.
We feel it’s important to represent the views of our member firms on this topic and others like it. We do not wish for silence to be seen as acquiescence on this.
We also wanted to reiterate our support for organisations like AMI who are lobbying on our behalf and to add weight to its call for any future regulatory review.
As Robert Sinclair says, we need to look “…at how we develop a new approach that gives proper scrutiny of how firms are able to operate within the UK regulatory framework”.
A Treasury Taskforce has been announced to look at this situation but it’s clearly not enough and, quite frankly, comes after the horse has bolted.
Of course, we fully accept the benefits of the compensation scheme and what it offers consumers when firms fail or fail their clients.
However, the complete lack of a level playing field between advice sectors and firms has perhaps never been so stark. It is just grossly unfair.
Rob Clifford is Chief Executive of Stonebridge