Of Relevance to
All firms
FCA Fees and Levies 2016-17
The FCA has published Consultation Paper CP16/9 “FCA Regulated fees and levies: Rates proposals 2016/17”.
Year-on-year the good news for firms is that the annual funding requirement (“AFR”) for 2016-17 remains unchanged at £481.6m. However, this year the costs associated with the regulation of Consumer Credit – the FCA assumed responsibility for this area on 1 April 2014 – are included in the AFR for the first time with the result that the total AFR for 2016-17 increases to £519.3m. The actual fees to be collected benefit from a reduction of £49.6m thanks to the financial penalty rebate – although the FCA has to hand over to HM Treasury all the financial penalties it receives, it is permitted to retain sufficient to meet the costs of enforcing those penalties. Table 2.1 in the consultation paper provides a useful high-level summary of the 2016/17 fees situation.
The FCA are currently forecasting an underspend of approximately £10m. The Regulator proposes retaining this to improve its deficit of £174m (as at the end of 2014-15) which is due, in part, to its defined benefit pension obligation. We are advised that the underspend will also help mitigate future costs such as those relating to the FCA move to The International Quarter (Stratford) in 2018.
Of course, aside from the periodic fees, firms will need to factor in the various levies payable (subject to any relevant exemption) including:
- Financial Ombudsman Service (see Annex 3) where the total levy has increased by £1.2m as a result of Consumer Credit firms now falling within the Compulsory Jurisdiction.
- Money Advice Service (Chapter 11) which is collected in two separate levies being ‘money advice’ (£27.6m) and ‘debt advice’ (£41.3m), although the latter falls only upon deposit acceptors and home finance providers and administrators.
- Pensions Guidance Levy (Chapter 8). As was the case last year, the levy will be apportioned between five fee blocks including portfolio managers (A.7) and managers of investment funds (A.9). It is confirmed that a new pensions guidance body will be formed to replace the pension guidance services currently operated through e.g. the Money Advice Service. However the earliest date that the new body would operate from is April 2018.
To help firms to get an idea of the total fees and levies that they will be paying – subject to the any adjustments arising out of the subsequent Policy Statement – the FCA provide a fees calculator.
Comments are invited by 27 May 2016. The Policy Statement setting out the final fees should be published at the end of June or early July.
