As advised in Regulatory Roundup 47, the FCA Business Plan identified an Annual Funding Requirement (AFR) of £432.1m which, of course, has to be met by fees.
The FCA has now published its very first consultation paper CP13/1 (not to be confused with the FSA’s CP13/1 concerning the FSCS Funding Model Review which was published in January) “FCA Regulated fees and levies: Rates proposals 2013/14”.
The combined FCA and PRA AFR amounts to £646.3m. The figures are combined to allow comparison with the FSA’s position for 2012/13; unless a firm is dual regulated it will only need to concern itself with the FCA figures.
In the FSA’s previous consultation, the FSA AFR for 2012/13 was originally £578.4m, but this was later trimmed back to £559.8m as a combined result of a reduction in IS budget and a £10.6m surplus from the previous year (PS12/11 refers). On a like-for-like basis we are therefore looking at a headline increase of £86.5m (+15%). We are told that the increase relates to the costs of increasing front line supervision staff, IT costs and an increase in central support services costs.
As will be known (see Regulatory Roundup 42), HM Treasury has decided that enforcement fines, net of enforcement costs, now have to be paid to the Exchequer. This means that of the £381.8m financial penalties collected by the FSA in 2012/13, only £40.6m (the equivalent figure last year was £70.7m) can be ‘kept’ by the FCA to be returned to the industry by way of discounts to their fees. Taking account of the financial penalties rebate, the combined chargeable fees amount to £605.7m (vs. £489.1m previous year) so that the headline increase of 15% becomes a combined increase of 24%. The £40.6m rebate is applied to FCA 2013/14 fees to the benefit of fee-payers e.g. fund managers (Fee-block A.7) will benefit to the extent of an £8.2m rebate. Table 6.1 in FCA CP13/1 details the distribution of the rebate.
The overall impact of all of the above (and more) means that the calculation of fees that firms actually end up paying is nothing if not complex. Fortunately the FCA has continued the tradition of providing a fees calculator for firms to establish the impact of proposed fees (although bear in mind that it will be based upon consultation, and not final, rates). The calculator also incorporates the FOS, FSCS and MAS levies.
Unless a firm is required to pay fees ‘on account’ (only where fees are at least £50,000) then firms can expect FCA invoices to be issued from July onwards. Firms are reminded that unless applications to reduce the scope of, or to cancel, permissions have been received by the end of March in the relevant year then they will be liable for the full periodic fee – no refunds are given.
