The £15 million supplementary levy imposed on mortgage brokers by the Financial Services Compensation Scheme (FSCS) will hit the best-qualified brokers hardest, according to the National Association of Commercial Finance Brokers (NACFB).
The organisation’s chief executive, Rob Lankey, says the levy is welcome as it protects borrowers.
However, he stresses that NACFB members have already been investing their own money into compliance, through dedicated schemes, training and education.
“This laudable work means there is less spare money to spend on the FSCS levy, so this supplementary levy hits the best-qualified brokers hardest of all,” says Lankey.
One fifth of NACFB members – 170 firms – carry out residential mortgage business, but only a small proportion of those offer any investment advice and far fewer offer any kind of unregulated investment scheme of the sort that has led to the imposition of the levy.
“We note that the FSCS does not expect this level of costs to continue into future years,” Lankey adds.
“Unfortunately measures of this sort do not send out the right message, whether or not each payment taken is large enough to do financial damage to the broker.”
He says that it seems unreasonable to target the ‘good guys’ when the levy has been introduced due to the majority of claims being made against one unspecified broker.
“This is particularly unreasonable when the activities concerned related to unregulated overseas investments not to failings in the mortgage advice activities for which mortgage brokers pay their regulatory dues,” Lankey says.
The NACFB says it would prefer to see a more equitable approach ‘that recognises the work brokers are already putting in every day to raise the standards of the industry’.