RegulationJul 21 2014

FCA consults on draft ‘guidance guarantee’ levy

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The Financial Conduct Authority is consulting on draft levy rules, with the ultimate aim of an industry levy to fund the Budget’s ‘guidance guarantee’.

A report released today (21 July) by the FCA reads: “The government consultation response sets out the role for the us in collecting the levy to fund the provision of retirement guidance.

“This includes the design of the levy so that it is raised from the population of firms that will potentially benefit from the retirement guidance service in terms of more engaged and more empowered customers, making better-informed decisions about how to use their pension pots in retirement.”

The FCA will use its existing ‘A’ fee-block framework which is made of a series of fee-blocks under which the relevant firms pay annual periodic fees to the organisation.

The proposal is to use the ‘A’ block framework to collect the retirement guidance levy. The FCA is proposing on three options on how to allocate the levy across the five retirement guidance fee-blocks:

• basing it on the total FCA AFR allocated to these five fee-blocks;

• the fee-blocks which would each pay a 20 per cent proportion of the overall retirement guidance levy; or

• allocate the fee in line with consumers’ retirement choices.

The FCA said it believes that the firms that contribute to the retirement guidance levy “should, as far as possible, be those that would potentially benefit when these consumers go on to purchase the financial products and services supplied by them.”

All firms will pay a minimum fee which is currently £1,000 except in the case of smaller credit unions and smaller friendly societies who pay lower minimum fees depending on their size.

Firms can be in more than one fee-block depending on the range of activities they have permission to carry out.

The consultation closes on 22 September 2014.