The broker, who wishes to remain unnamed, contacted Mortgage Introducer after discovering that the FSA would charge a fee of £1,500 to switch his firm from a partnership to sole trader status, despite the fact no other changes were occurring.
He said: "The original application for a new firm cost around £900, so £1,500 simply to switch is outrageous. I have contacted the FSA who have said that it is under review but to me it seems like a bit of a money-making exercise. It's really put me off the idea."
Ray Robin Gordon-Walker, spokesman for the FSA, said: "The exact fee depends on how complex the change is. It costs £1,500 for a straightforward change of entity as it means the firm effectively becomes a new one.
"If brokers applied pre-'Mortgage Day' they would have paid specially reduced rates because of the sheer number of applicants expected. Brokers applying now have to pay the full amount."
Linda The FSA recently reviewed and renamed its change of legal entity application, making it considerably shorter and widened its scope to allow more firms to use it. The body claims that this will help make the FSA easier to do business with.
Rob Clifford, managing director of Mortgageforce, believed that the fee will cause small businesses to suffer. He said: "It is regrettable that small firms face these duplicated regulation costs.
"It is fundamentally wrong. Under the MCCB regime proportional refunds could be given at the MCCB's discretion and a fresh claim for fees could be requested from the new legal entity. It's something that the FSA should look at as most of the marketplace is made up of small, privately-owned businesses
