Authorised firms will receive their first ‘consolidated invoice’ from the regulator from July 1st and this will be significantly higher than any direct costs under previous regulatory regimes. This invoice will comprise of a firm’s:
FSA fee for 2005-06;
Financial Ombudsman Scheme levy 2005-06;
Financial Services Compensation Scheme levy 2005-06; and
‘Stub period’ fee, from October 31st 2004 to April 1st 2005.
For many smaller firms, the increase in cost may be up to eight times higher than payments made to the Mortgage Code.
The FSA had not intended to establish a payment by instalment system itself. However, AMI’s work with the FSA and credit providers means a system is now in place to enable firms to spread their payments.
AMI member firms will even benefit from a full 1% discount off the standard rate following negotiations on their behalf. AMI members are offered a flat rate of 3.3% (9.1% APR) on all loans up to £100,000, with non-members able to obtain a standard rate of 4.3% (11.9% APR).
The arrangement, provided by Premium Credit, is available to currently-authorised firms on a guaranteed basis, with no application or additional fees of any description.
On announcing the successful outcome of the negotiations Chris Cummings, Director of AMI, said: “This is a major success for AMI and its members. The possibility of an instalments system has been one of our lobbying objectives since inception. We are delighted first, that we gained the consent of all parties to set up the scheme – and that we can offer our members a discount off the usual rates. This is in direct recognition of the fact that trade body members are better informed and so should be better able to run their businesses. Thousands of firms will now have the option of reducing the cost burden placed on them.
“The consolidated invoice will be a considerable increase on previous fees, and the opportunity to spread the cost will be a very considerable benefit to intermediaries. We are pleased at this news and grateful to the FSA and Premium Credit for their cooperation.”
Under the terms agreed, firms will have access to monthly, quarterly or six-monthly repayment periods regardless of the loan size, with fee-free top-up loans also available if required.
The FSA is expected to include an application form for the instalment plan as part of the invoice pack sent to firms. AMI will provide members with detailed instructions about what they need to do and how to apply for the instalment plan shortly.
