Insurers, mortgage lenders and associated intermediaries will have to pay FSA fees based on "notiona...
Insurers, mortgage lenders and associated intermediaries will have to pay FSA fees based on "notional commission" calculations, when they are not paid through commissions, says the latest consultation.
Following previous consultation paper 180 on payment of regulatory fees, the FSA has now revised its thoughts in CP192 on how to determine a mortgage or insurance intermediary's income and the ongoing annual fees they should pay as a result, because around 5% of the market is still not "adequately captured by the income definition in CP180", says the FSA.
"There are a number of firms that sell mortgages or general insurance products where the proposed income measure will not accurately capture the size of their business because these firms do not earn 'commission' for selling their own products, " says the FSA.
"CP192 extends the fee-raising framework set out in CP180 to cover these firms as well."
The FSA proposes that, in layman's terms, any firm that advises a client on a mortgage or insurance policy, as well as sell the original product, must multiply the amount earned through sale of the product by either 0.5% (for mortgage products) or 10% (for insurance products to determine the level of fee or commission that would have been earned.
This must be added to any "normal" commission earned by the firm, says the FSA, to help determine the overall fee that must be paid to the FSA.
The FSA points out that these change will only apply to those advisers which are already attached to a mortgage lender or insurance firm - such as tied advisers - as they are unlikely to earn commissions if the firm it is linked to has already earned money from the product.
If the firm is a mortgage intermediary, the calculation amount must be multiplied by "0.5%", says the FSA, whereas insurance intermediaries must multiply their income from fees and commission by "10%" to give the level of fees payable.
Those lenders which also earn commission or fee have a slightly more complex calculation, wherein the firm must establish how much income has been earned - listed as "A" - multiply that by 0.5% (B) and multiply that again by 0.5% (C) to give the annual income on which FSA fees must be based.
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