The FCA has recently published its Consultation Paper on Regulatory fees and levies: policy proposals for 2024/25, which sets out the FCA’s proposed policy changes to the way it will raise its fees from 2024/25. The proposed changes will affect firms that pay fees or levies to one or more of the FCA, the Financial Ombudsman Service (“FOS”) and the Financial Services Compensation Scheme. It will also impact any businesses considering applying for FCA authorisation or registration.
The FCA’s proposals are briefly summarised below:
Increase in minimum and flat fees
The FCA is proposing to resume the increases in 2024/25 of the previously frozen minimum fees for all bar the FCA prudential fee with incremental uplifts in subsequent years.
| Firm Type | Current Minimum Fee | 2024/25 Minimum Fee | Minimum Fee by 2026/27 |
| Limited permission consumer credit firms | Between £350 and £1,000 depending on income levels | Between £600 and £1,100 depending on income levels | £1,100 |
| Full scope consumer credit firms | Between 1,000 and £1,500 depending on income levels | Between £1,250 and £1,750 depending on income levels | £2,200 |
| All other firms | £1,500 | £1,750 | £2,200 |
Measure of proxy income for certain consumer credit firms
The FCA is also reassessing the calculation method for the proxy income of certain consumer credit firms. The change will affect limited permission retailers and lenders, who will no longer be applying the Bank of England base rate to the total loan amount to make the calculation. The FCA is instead proposing to remove the use of the Bank of England base rate from the calculation of the proxy, leaving just a factor of 5% for the time being.
New fees structure for firms dealing as principal
Following the removal by the Investments Firms Prudential Regime (IFPR) of the certain prudential exemptions that allowed some MiFID trading firms to be put in fee-block A.13 (advisor, arrangers, dealers or brokers), the FCA is now proposing that these firms be moved into the A.10 fee-block (principal dealers). This will affect, among others, firms with a “matched principal” dealing exemption.
Change in approach to the structure and tariff base of fee-block A.10
Another proposed change seeks to split the A.10 fee-block into two sub-categories:
- 10A – for dual-regulated and non-MIFIDPRU investment solo-regulated firms
- 10B – for MIFIDPRU investment firms
A new tariff base is also introduced for the fee calculation for A.10B fee-block firms. This will involve a shift from the use of trader headcount to trading activity, utilising the K-factors relevant to market risk of net position risk (K-NPR), clearing margin given (K-CMG), daily trading flow (K-DTF) and trading counterparty default (K-TCD), as reported under the Form MIF001.
Definition of ‘relevant business’ for FEES 5 (FOS)
The FCA is also proposing to widen the definition of “relevant business” for the calculation of levies payable to the FOS. The revised definition will include business conducted with all customers eligible to complain to the FOS, not just consumers (as currently defined). This will result in fees increasing for those firms that deal with eligible complainants other than consumers, such as micro-enterprises and smaller charities and trusts.
Authorisation fees
Although there is no monetary value set out in the paper for authorisation fees, the FCA has indicated that, in line with periodic fees, fees for authorisation previously frozen for 2023/24, will be increased in 2024/25 in line with the increase in the Ongoing Regulatory Activities (“ORA”) budget, i.e. increases in the overall cost of operating the FCA. This will be announced in the FCA’s Business Plan for 2024/25, due to be issued in March/April 2024.
How Complyport Can Help
If this Article has raised any queries regarding the FCA’s proposed changes to the Regulatory fees and levies for 2024/25, or your firm requires assistance with navigating the FCA Authorisation process, contact jan.hagen@complyport.co.uk today for a free consultation.
About Complyport
Complyport is a market-leading consulting firm supporting the UK financial services industry for over 22 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
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