Mortgage industry faces FSA charges

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The Independent Online

The move towards more mergers and takeovers in the mortgage industry is expected to accelerate when the Financial Services Authority (FSA) takes regulatory responsibility for the sector next year, according to a new report.

National Economic Research Associates estimates that Britain's 155 mortgage lenders will have to shoulder a one-off "entry fee" of £83m to be regulated, followed by an annual charge of nearly £28m. The 13,725 home loan brokers and advisers face a starting fee of £51.5m and an annual payment of £40m.

Many of the high-street brokers, which are often run by people approaching retirement, may find it more attractive to sell their businesses than take on such high additional costs, which work out at a one-off £3,750 per firm and then £2,900 a year.

It would suit the FSA to see a high proportion of these firms disappear, as it has made no secret of its dislike of having to administer the thousands of independent financial advisers with its existing investment industry remit. The FSA will also be glad of the extra income, as it is understood to be coming near the end of its "rent holiday" in the offices it occupies in Canary Wharf, east London.

The FSA takes over from the Mortgage Code Compliance Board in October next year. It said yesterday that it had yet to finalise the detailed charges, but there would be discounts for firms which registered early.