CP24/25: FCA Fees and Levies for 2025/26

The FCA recently released its Consultation Paper CP24/25, detailing proposed changes to regulatory fees and levies for the 2025/26 financial year. This Consultation is part of the FCA’s annual review process, aimed at ensuring a fair and transparent fee structure that supports its regulatory activities.

Fee Adjustments

The FCA proposes changes to the way fees are raised from regulated firms. This includes adjustments to the fee rates and the introduction of new fee categories to better reflect the regulatory costs associated with different types of firms.

Specifically, the FCA intends to change the fees for:

  • registration of Small Payment Institutions (SPIs);
  • registration of non-crypto Annex 1 financial institutions (Annex 1 firms);
  • FCA appointed skilled persons (s166) reviews;
  • application of validation orders (VOs); and
  • principal firms of appointed representatives (ARs).

A. Registration fees for SPIs

At present, SPIs pay a category 2 registration fee (£540) to the FCA. Due to the increase in the complexity and time taken to assess SPI registrations since their introduction in 2009, the FCA is proposing to uprate the SPI registration fee to a category 3 fee (£1,090) to make sure cost recovery is shared more equitably between fee-payers.

B. Registration fees for non-crypto Annex 1 firms

Annex 1 firms currently pay a category 1 fee (£270) to register with the FCA. Over time, due to the continued evolving risks and harms linked to money laundering and the subsequent impact on our gateway assessments, as with the case of SPIs, the complexity and time to process these registrations has increased. For this reason, the FCA is proposing to raise the registration fee for Annex 1 firms to a category 2 fee (£540) to ensure a more proportionate sharing of fees among firms.

C. FCA appointed s166 review fees

Whilst most Skilled Persons are appointed by the firm that is subject to the review, some are appointed directly by the FCA.  When appointing a ‘Skilled Person’ in such circumstances to review and submit a report on aspects of a regulated firm’s activities where the FCA has concerns, the FCA can recover the Skilled Person’s costs from the authorised firm.

The FCA is therefore proposing to amend the language in FEES to clarify that a firm is only liable to pay fees relating to skilled persons when the FCA has given notice of the appointment and not when notice of its intention to appoint a skilled person is given.

D. Fees for application of validation orders (VOs)

Where a firm wants to enforce a regulated credit agreement entered into before obtaining the appropriate permission or where the agreement was made through an unauthorised person, it must apply to the FCA for a VO.

At present, firms that apply for a VO pay a single application fee that is based on the total value of the agreements to be validated. The current VO fee structure does not accurately reflect the FCA’s time and costs when assessing applications, as the fees the value of agreements is not actually a significant factor in determining the time required and relevant costs. Instead, the number of agreements to be validated and the number of third parties the applicant has used are considered more integral to the fee assessment.

The FCA is proposing to update the application fee rules so that they align with the new 2-stage process for VO applications introduced in October 2024.

E. Fees for Principal firms of ARs

The FCA’s work on ARs has been funded through a flat-rate periodic fee on principal firms in fee-block A.22. This is based on the number of ARs and introducer ARs (IARs) for which they are responsible. At present, the flat fee is £289 for an AR and £87 for an IAR.

The FCA is proposing to replace the flat-rate fee model with a variable fee model, similar to that used for many other fee blocks, to ensure recovery of actual costs incurred.  Although no firm decision has been made, the FCA estimates that had a variable fee model been used in the current funding year, individual principal firms would have paid broadly the same amount that they did under the flat rate method.  The possible introduction of the flexible model is designed to ensure that the fee can be adjusted to recover actual costs incurred.

Other changes

F. Firms dealing as Principal

The Consultation Paper also confirms that previously announced changes to the definition of fee blocks A.10 and A13, which will result in some firms moving from A.13 to A.10 and some falling in both blocks, will take effect in April 2025.

Additionally, it was noted that the current tariff base for calculating fees for Principal dealers (based on trader headcount) is an increasingly unreliable measure of trading activity and alternative approaches to calculating the fees of such firms are being sought.  The FCA expects to consult on its proposals for alternatives for this tariff base in November 2025.

G. Financial Ombudsman Service (FOS)

The expansion of the definition of “relevant business” for some FOS fee blocks had previously been proposed and was due to come into effect in April 2025.  These changes, which were required as the current definition does not capture business from eligible complainants who are not consumers (such as small businesses and charities), are now proposed to come into force in April 2026 allowing the FCA more time to consult and implement its final proposals.

How can Complyport help?

Firms and other stakeholders can submit their comments before the consultation period closes on January 24, 2025. The new fee and levy structures will come into effect in April 2025.

Navigating the FCA’s annual fees and levies changes can be time-consuming and cumbersome. We help firms to ensure they are ready before any fees changes are implemented by providing:

  • Regulatory guidance: supporting firms in understanding the relevant fees that apply to them
  • Financial and Regulatory reporting services
  • Ongoing support: supporting with any questions regarding new regulations and their impact

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