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FCA to change way it calculates fees

FCA to change way it calculates fees

The Financial Conduct Authority has revealed plans to change the way it calculates how much the industry pays in regulatory levies for 2019 to 2020.

In a 72-page consultation paper published today (November 15) the FCA proposes axing fee-block F, which contains mutual societies that are registered on the mutuals register but not authorised by the FCA under the Financial Services Act 2000.

The FCA would charge the cost of maintaining the register as an FCA overhead, representing an addition of approximately 0.3 per cent to the fees of variable fee-payers.

The watchdog also proposed removing charges for inspecting the register, except where a member of the public requests a personal visit to FCA offices.

According to the FCA's consultation paper, it costs the watchdog roughly £1m to maintain the register, but at least £150,000 of that represents the cost of collecting the fees, so the net cost of the register itself is around £850,000.

The FCA stated: "The process of collecting fees from unauthorised mutuals is becoming increasingly expensive and is preventing us from introducing full online invoicing, which would deliver significant savings for both authorised firms and the FCA."

The regulator also proposed firms currently contributing to the cost of debt advice across the UK will continue to do so.

However, they will contribute through two separate levies – one for the devolved authorities (to fund debt advice in Scotland, Wales and Northern Ireland) and one for the new single financial guidance body that will fund debt advice in England.

In the April 2019 fee rates consultation paper the FCA will consult on the rate for the levy.

It was in July that advisers were told they would have to pay 4 per cent more in regulatory fees in 2018 to 2019.

The regulator published a policy statement on regulated fees and levies, which showed advisers would pay a combined £80.3m for 2018 to 2019.

This was a 4.2 per cent increase from the £77.1m which advisers paid in 2017 to 2018.

It was a greater increase than the one seen for home finance providers, which will pay 3.8 per cent more, for life insurers, which had to pay 3.2 per cent more, and for deposit takers, which saw their fees remain flat.

In monetary terms advisers pay the largest single amount, compared to the £43.2m paid by life insurers and the £71.5m paid by deposit takers.

Overall, the total levy paid by the industry towards the FCA in 2018 to 2019 was set at £543.9m, up 3.2 per cent on the previous year.