This largely reflects the increase in regulated mortgage lending via brokers over the period. According to FCA Product Sales Data, total regulated mortgage transactions carried out via intermediaries were 47% higher in 2016 than in 2013, whereas loans made direct from the provider to consumer were down by 20% over the same comparison period.
The number of firms reporting revenue from mortgage mediation has remained fairly static at just under 3,800. Many of these are firms whose primary business is retail investments who also earn some revenue from mortgage mediation business.
Commission continues to be the main source of revenue for this type of business, accounting for approximately 80% of revenue earned in 2016.
91% of mortgage brokers also earn revenue from insurance mediation. Total revenue earned from the selling of insurance products by these firms is over 60% of that earned from their mortgage related business. In some cases, insurance accounts for the largest portion of their revenue.
These firms are also likely to generate income from other regulated activities such as consumer credit business. Of the firms categorised as mortgage brokers, a large number are small firms – 55% have only one member of advice staff and 88% have five or fewer advisers.
There are a small number of very large firms who account for a significant part of the market – the top 2% of firms (by adviser number) account for over two thirds of the advisers and mortgage revenue earned.
The vast majority of firms (83%) report that they provide independent advice, with 15% providing restricted advice and 2% both types. However, independent advice accounted for 61% of revenue from adviser charges - slightly down from the previous year (2015 - 62%).
This reflects the fact that, although fewer in number, the restricted advice population includes some very large firms that account for a significant proportion of the total business conducted.
For firms with the primary category of financial adviser, there is a higher proportion of firms providing independent advice (87%), accounting for 67% of revenue from adviser charges.
Around 80% of payments to advisers (by value) were facilitated by the provider or platform.