The consultation paper also provides clarification for intermediaries on the definition of income, which is the tariff base for a number of fee blocks, including those that relate to advisers, arrangers, dealers or brokers (A13), corporate finance advisers (A14), home finance providers (A18) and general insurance mediation (A19). In light of its discussions with firms, the FCA is minded to consolidate, clarify and simplify its definition of income for the above purposes and associated guidance. That said, there are still two areas where firms are asked to interpret their data so they are able to prove, if challenged, that their estimates are based on reasonable methodologies.
The first of these areas is where firms have taken the decision to rebate or waive their normal charges, in which instance the FCA expects firms to estimate the commission equivalent or fair value of the relevant rebate or waiver. The second area is where firms elect to apportion their income on the basis of a representative split of business.
Arms
Approved Reporting Mechanisms are portals that have been approved by the FCA for the submission of transaction reports on behalf of regulated firms. Arms currently pay a £100,000 application fee but nothing further. The current consultation paper proposes an additional annual maintenance charge to cover the costs of routine maintenance and testing. It is proposed that these costs are allocated in proportion to each Arms’ share of the market. For 2014/15 the rate proposed is £16.87 for each 100,000 transaction reports submitted.
Mas
The latter part of the consultation paper discusses proposals for a better method of allocating Money Advice Service costs to fee blocks. The proposals include both money advice and debt advice costs. While overall, the costs of the service are reasonably modest, firms can expect to see some changes if the allocation methodology across fee blocks is carried forward.
In the area of the money advice levy, home finance providers, general insurers, operators and depositaries of collective investment schemes, advisers, arrangers and dealers, home finance providers, e-money and payment services firms can expect an increase, with other types of firms generally benefiting from a decrease. In terms of the debt advice levy, it is proposed that this is shared equally between deposit acceptors (A1) and home finance providers (A2), resulting in an increased share being picked up by the former and less by the latter.
The FCA’s consultation period closed on 6 January. A policy statement and final rules are expected in February or March.
