Mortgage lenders and intermediaries alike will fall under the organisations’ remit from October 31st and CP04/4 Mortgage firms and Insurance intermediaries: Funding of the Ombudsman and Compensation schemes lays down the FSA’s proposals for each firm’s contribution. The FSA is now considering AMI’s response and will publish the final rules in October.
From 2005 mortgage intermediaries will receive a single invoice covering their FSA dues – including periodic fees, FSCS levy and FOS levy. The total will be considerably higher than current subscriptions to the Mortgage Code and MCAS. This means that it is important that the allocation of costs is fair and is seen to be fair.
A key proposal is the division of mortgage and general insurance business into two separate ‘contribution groups’ for FOS and FSCS, with charges depending on a firm’s business activities. While the approach is intended to prevent unfair cross-subsidy among different sectors, AMI is concerned that thousands of intermediaries active in both mortgage and general insurance should not be levied twice.
With the FSA proposing periodic fees based on a full charge for main business area and 50% for others, AMI is urging the regulator to ensure fairness and consistency by using the same system for intermediary firms’ FOS/FSCS contributions.
Chris Cummings, Director of AMI, comments:
“With MCCB and MCAS becoming obsolete on Mortgage Day, it was inevitable that would become the complaints mechanism for the mortgage industry.
“Since the proposals for periodic fee calculations include payment of the full amount for a firm’s core area of business - with additional areas subject to a 50% discount - incorporating this ‘secondary activity discount’ into FOS and FSCS contributions would be a fair, consistent and proportionate approach.”
