FSA ups fees for mortgage and insurance brokers

Mortgage and insurance brokers will have to fork out higher fees to the City regulator this year while independent financial advisers will pay less, under new rules announced today. The Financial Services Authority upped its funding requirement by 9.9% for this year to £454.7m and announced that 60% of City firms will pay smaller fees, while 40%, including large organisations, have to pay more. "The increased cost of intensive supervision will be levied on those firms whose size and impact require the most regulation from the FSA," it said. For mortgage brokers, minimum fees are set to increase 34% from £745 to £1,000. General insurance brokers are seeing a 122% increase, although this is from a lower base. Until now, they have only paid £450. By contrast, independent financial advisers will enjoy a 46% fall to £1,000. In the past, they paid £1,850 minimum fees plus 50% if they had different permissions. All firms pay a flat fee of £1,000 and after that a sliding scale operates. A spokeswoman said the FSA had simply aligned the fees to its supervisory regime. "Where a firm or sector is subject to an intensive supervisory regime, they will see that reflected in their fees." The watchdog hired 280 new staff last year as part of its supervisory enhancement programme, pushing up its costs by 4%. The additional increase reflects the investment needed under the new Solvency II regulations for insurance firms and a further increase in supervisory capability. "In the light of the experience of the last 12 months, this extra investment is clearly required to supervise the very largest firms," the FSA said. Hector Sants, the FSA's outgoing chief executive, said: "We recognise that any increase in the industry's costs is unwelcome at a time when margins are under pressure in some segments of the industry. "However, the overall increases are necessary to deliver our new intensive supervisory approach. The new fee structure will ensure that the costs are fairly distributed and the increased investment is paid for by those firms who will be subject to the increased scrutiny."