Adviser firms could face a 63 per cent hike in the levy they pay to fund the Money Advice Service, in the next financial year from 2014, if proposals by the Financial Conduct Authority go ahead.
In a consultation paper published today on regulatory fees and levies, the FCA proposes that firms in the A13 fee block, including advisory firms which do not hold client money, would be required to pay £4.4m of Mas levies, up from £2.7m previously.
Firms in the A12 fee block including advisory companies which do hold client money would not be affected by the proposals.
Corporate finance advisers’ Mas levies would be reduced by 8.5 per cent.
The adjustment to levies follows a re-allocation method proposed by the regulator which the FCA says gives a clearer link between how consumers use the Mas, the Mas’ business strategy and the firms that pay for it.
Under the new allocation method consumer usage of different parts of the Mas will be cross-categorised against the service’s five outcomes (managing debt well, saving regularly, saving for retirement, protecting assets and making provisions for dependents).
The paper also sets out proposals for how companies will pay for consumer credit licenses.
Firms applying for limited permissions to undertake lower-risk consumer credit business could pay an application fee of only £100 if their consumer credit income is less than £50,000 annually, with larger firms charged £500.
Firms would also pay fees towards the Financial Ombudsman Service based on annual consumer credit income.
This would rise dramatically for firms doing riskier business and requiring full consumer credit permission, with the latter facing fees of up to £15,000.
The FCA proposed determining charges based on how complex it will be to process a firm’s authorisation. The fees would range from £1,000 for a straightforward activity such as credit broking to £15,000 for providing credit references.
Fees will be based on company income and the level of permissions the company seeks.
In addition to setting out its proposed fees for consumer credit providers, the FCA is also consulting on a new fee block for investment firms that safeguard or administer assets, or hold client money; fees for approved reporting mechanisms; and some minor adjustments to the fees regime, including a requirement for application fees to be paid by credit or debit card.
Responses to the consultation are due by 6 January 2014.
