Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
The FSCS has set its funding requirement for 2021/22 with the total amount to be invoiced rising to £1.04bn. This is because the Life Distribution and Investment Intermediation class and the Investment Provision class have breached their threshold maximums. Total costs in those two sectors are £705m, with a maximum chargeable of £440m. This triggers the “Retail Pool”. The balance is therefore shared in proportion across the other classes.
This means that the amount to be levied on mortgage advice firms for 21/22 will be for their share of £22.9m based on mortgage income and their share of £146.8m based on GI and Protection commission income. In the 20/21 plan the initial amounts levied and received were £2.0m and £24m respectively. This allows us to infer that it is likely that the amounts to be invoiced to firms for the 21/22 FSCS costs will be broadly 10 times the amount that was invoiced in the annual FCA invoice for 20/21.
AMI continues to express its extreme concern over these escalating costs. This is demonstrable evidence of clear failure in both authorisation and supervision by the FCA. As Chief Executive of AMI I am incandescent with rage. This is a dark day when an industry will have to find £1bn to pay for fraud and bad advice. The FCA has let this happen and it is wrong that good firms are paying for the regulator’s failure to do its job.
Chief Executive, AMI