The Association of Mortgage Intermediaries has called for more financial concessions to help brokers through the covid crisis and accused the FCA of prioritising its own agenda over the needs of the firms it regulates.

The trade body is urging the FCA to revise its budget for 2020/21 and says the regulator has failed to take account of the structure of the mortgage market as small firms that are part of networks are not set to receive any  relief from fees.

In fact, Ami says that large firms and networks face increased costs as they shoulder the burden of concessions made to small and medium firms with fees under £10,000.

In its response to the FCA’s consultation paper CP20/6 on regulated fees and levies, Ami argues that it is unfair for larger firms to pay more, particularly mortgage networks where the fees are passed onto appointed representatives as part of their membership bill, meaning small firms will continue to suffer.

Instead Ami wants to see the FCA look at reducing its operational costs.

It claims that the cost of paying compensation to customers that have been treated badly by financial firms now surpasses the costs of running the FCA, suggesting its regulation has fallen short.

Ami’s response states: “Given the annual costs of compensation now dwarf the costs of operating the FCA this must call into question the effectiveness of the authorisation and supervision processes historically applied by the FCA.”

Ami also points out that while mortgage brokers and other regulated firms have had to make drastic cutbacks and furlough staff, “there seems to

be no indication from the FCA that it is stripping back costs in order to run an efficient organisation with the minimum staff needed to offer basic support, supervision, enforcement and authorisation, to help reduce the financial burden on firms”.

Ami’s consultation response adds: “That the FCA felt it appropriate to prioritise funding for a business plan that was designed before the crisis hit and is largely now on hold and potentially out of date, over additional support for firms is disappointing.”

Ami chief executive Robert Sinclair says: “Whilst we support the freezing of fees for smaller firms, we cannot support this cost transfer to larger firms. “The changes to the proposed fees in light of the Covid-19 pandemic should have been greater and further reaching. 

“We are concerned that the FCA’s fee proposals neither reduce its current expenditure nor suggest an intention to reduce spending next year in view of the likely reduced turnover of and indeed likely reduced number of regulated advisory firms. 

“The FCA should look to reduce operational costs where possible rather than continuing along the path that was deemed appropriate pre-crisis. Essential costs including authorisation, supervision and enforcement must be prioritised over strategy and competition agendas until there is a clearer view of the post-lockdown landscape.”

He adds: “Mortgage intermediaries will be vital in the new world where consumers are more vulnerable and with higher amounts of both secured and unsecured debt. 

“People will need good quality advice to help them to understand the best product available, under their potentially changed circumstances, to meet their needs. 

“As with the trapped borrower cohort, advice will be key. 

“This budget should be referred back to the Board to reconsider its position.”