View more on these topics

FSA cuts mortgage firms&#39 FSCS levy by nearly half

Mortgage intermediaries&#39 contributions to the Financial Services Compensation Scheme will be almost half the amount originally proposed.

When statutory mortgage regulation starts next week, mortgage intermediaries will be subject to FSA, Financial Ombudsman Service and FSCS fees, just as IFAs currently are.

The FSA says the levy that the FSCS will take from mortgage intermediaries has been cut from 1.5 per cent to 0.8 per cent of a firm&#39s annual income. The same 0.8 per cent levy will also apply to general insurance business.

IFAs – which do not have a percentage rate cap – have been struggling to meet the FSCS levy, which in some cases has increased by over 1,000 per cent in the last year.

The FSA calculates that the levy will raise £80m from the general insurance sector and £16.5m from mortgage firms but if compensation claims are higher than expected, this will trigger a fundamental review of the financial safeguards in place for mortgage and general insurance mediation.

IFAs – whose levy is calculated in relation to the number or approved persons working at the firm and not as a percentage of annual income – will face an extra levy for any mortgage business they do. This component of their levy will be calculated as a percentage of their annual income from mortgage business.

Association of Mortgage Intermediaries policy officer Ben Stafford says: “The reduction is a very welcome move which we recommended to the FSA during consultation. The vast majority of mortgage intermediaries sell general insurance products and any moves to reduce the contribution costs should be welcomed.”


Legal & General – Protected Capital and Growth Plan

Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment:£500-no maximum, Isa £3,000-£7,000 Term: Six years Return: The greater of 26% of original investment or 50 per cent of the growth in the index Guarantee: Original capital returned in full along with 26% growth regardless of performance of […]

Standard Life Bank and IFA clash over &#39back-door&#39 selling

Standard Life has apologised for its subsidiary Standard Life Bank poaching business from an IFA. Derek Williams Partnership director Derek Williams discovered that his client had been approached by Standard Life Bank offering him a capital-protected product which is only available direct to investors. Williams says his only option was to recommend the plan to […]

Santander chief set to replace Arnold at Abbey

Grupo Santander chief financial officer Francesco Gomez-Roldan is set to replace Luqman Arnold as chief executive of Abbey once the acquisition is approved by the FSA. The appointment of Gomez-Roldan is expected to take effect from November 15 subject to FSA approval on November 12. Arnold will continue to work with Santander as a senior […]

Confusion over declaration of fees on KFIs says Paradigm

Paradigm Consulting consultatnt Chris Fleetwood says there is some confusion over the declaration of commission on KFIs. He says, packagers with a branded-lending arm will have to show the whole fee on the KFIs. But pure packagers, which are not regulated wont have to show the fee. Fleetwood says: “This potentially could be very confusing.”

India: are further rate cuts on the horizon?

By Kunal Desai, head of Indian Equities, Neptune Kunal Desai, manager of the Neptune India Fund, discusses the key drivers of the Indian market’s outperformance and why he expects another rate cut, which will likely further support equities.  Read more here Important Information Investment risks The Neptune India Fund may have a high volatility rating […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment