The Association of Mortgage Intermediaries “fundamentally disagrees” with the FCA’s proposal to bring in a new fee category for principal firms and their appointed representatives.

In its official response to the FCA, Ami says that the levy rate of £250 per each AR, as outlined in the proposal, “is not proportional to the benefits which result.”

As well as this, the proposal not having been included with a cost-benefit analysis in the fees and levies consultation paper published in November 2020 counts as a “failure to follow due process on the FCA’s part.”

Ami adds that it has “deep concern” over how the proposal was made – being announced in mid-April this year, the association says that having a consultation period of just five weeks has not allowed it to fully consult its membership over what it says would be substantial changes.

“We therefore reserve the right to challenge the assumptions and proposals at a future date, directly or via other channels,” says Ami.

The response continues: “It is not sustainable to levy large amounts for the retail pool levy at short notice upon firms who have no direct responsibility for or influence upon the areas in which the consumer harm is caused.”

Ami chief executive Robert Sinclair comments: “This £10m additional charge is a disgrace. The industry deserves a better explanation on why from this new FCA management team.

“It is not inconceivable that current network models will be forced to change and that there could be a large migration of firms from AR to DA or leaving the market.

“In proposing these changes, the regulator must consider whether it would be comfortable with such a significant change to the mortgage intermediary sector structure and its ability to manage and control such a migration.

“The cumulative effect of the changes in FCA periodic fees and application fees; the new levy on principal firms for ARs and IARs; increases to FOS levies and case fees; the large increase in FSCS levies and the substantial increases of PII premiums exclusions and excesses is having a profound effect on firms’ profitability and potentially their viability.

“These cumulative proposals display a lack of clarity, fairness and is undoubtedly misleading.”