The Financial Conduct Authority is moving ahead with an increase in fees paid by newly-authorised firms as of January 24.
In a policy statement published today (January 10), the regulator set out the new structure for authorisation application fees, with an increase in the fees paid by new businesses seeking its authorisation, something which it last reviewed in 2014.
The FCA first proposed the idea in November 2020, to increase fees for straightforward applications from £1,500 to £2,500, and for moderately complex ones from £5,000 to £10,000.
Despite concerns from some that increasing these fees would act as a barrier to market entry, the FCA said at the time it would help “redress the balance of cost recovery” away from existing fee-payers.
It said its processing cost ranged from £2,450 on average for straightforward cases to £6,750 on average for more complex ones.
In November 2020 the FCA proposed revalorising and restructuring FCA application fees; restructuring application fees for claims management companies; and introducing new charges for notifications of changes in control and notifications under the senior managers regime and controlled functions for appointed representatives.
Following feedback, the regulator said in April it intended to proceed largely as consulted on, though with some adjustments in response to issues raised.
It deferred proposals on changes in control and said since the great majority of application fees are paid online, it was not able to implement proposals immediately and needed to amend and test systems before going live.
In today’s update it said: “We have now completed this exercise and the new structure will come into effect on January 24, 2022 as part of a major release of our Connect online application system.
“We need to complete further work before we introduce the new charge of £250 for stand-alone long Form A applications under SMR and CF(AR). We will give notice of the implementation date through a handbook notice.”
The FCA said most of its application fees have not changed since its predecessor, the Financial Services Authority (FSA), introduced them nearly 20 years ago.
“Inflation has subsequently eroded their value, leaving authorised firms paying an increasing proportion of our processing costs for applications for authorisation through their periodic fees,” it said.
When the FCA reviewed these fees in 2020, it identified more than 80 separate charges for FCA applications.
As part of the new structure it has condensed them into ten pricing categories, which it has done by revalorising them in line with inflation from the date of their introduction and then moving them up or down to the nearest pricing category.
Of these, 49 charges increased, 23 stayed the same and 11 were reduced.
“We believe that the overall impact of our proposals would raise the contribution of applicants towards the cost of processing their applications from about a third to about two-thirds,” it said.
“We consider this a fairer apportionment in principle, though there would not be a large practical impact on existing fee-payers.”