The one-off costs in the first year for those intermediaries currently unregulated by the FSA is calculated at around £11,000, while brokers already regulated for lifetime mortgages would have to pay around £6,000.
Pure reversion providers not already regulated by the FSA may have to fork out up to £475,000, while regulated providers will pay around £233,000.
The one-off costs include setting up systems, application fees, training staff and management and supervision.
The costs for both regulated and unregulated intermediaries were based on the assumption they small mortgage brokers.
Kevin Morgan, managing director of Consilium Financial Planning, said the costs were staggering. “These fees are hellishly high. This may see the end of home reversions. There are too many brains in Whitehall who study the theories but have no clue about the practicalities,” he said.
Jon King, chairman of SHIP (Safe Home Income Plans), said: “These costs are far too high. It will be a cold bath for those providers and advisers who are not already regulated. But high costs could deter unscrupulous providers from entering the market.”
Reversion provider - unregulated Reversion provider – regulated for lifetime mortgages Unregulated intermediary Intermediary – regulated for lifetime mortgages
Authorisationcosts £15,622 £7,811 £1,676 £838
Conduct of business £460,000 £225,000 £9,500 £5,000
Total £475,622 £232,811 £11,176 £5,838
(Rounded) £475,000 £233,000 £11,000 £6,000
(Figures are year one, one-off costs)
