FCA Fees and Levies 2017/18

FCA Fees and Levies 2017/18

Of Relevance to:
All FCA regulated firms

The FCA has published Consultation Paper CP17/12 “FCA Regulated fees and levies 2017/18”.

The annual funding requirement (“AFR”) increases by £7.6m year-on-year to £526.9m. The increase is a combination of a 1% (+£5.1m) in the ongoing regulatory activities (“ORA”) budget and an additional £2.5m relating to EU withdrawal costs (as in additional resource required to support EU planning and general counsel activity). For the record the ORA covers the FCA’s core operating activities so includes items such as staff costs, office accommodation etc.

A third element in the AFR of £526.9m is figure of £16.4m (which remains unchanged from 2016/17 and so doesn’t contribute to the headline £7.6m increase) which are costs associated with ‘changes to our regulatory scope’. Of this sum, £9.2m is attributed to costs associated with MiFID II and £6.2m for consumer credit coming within the remit of the FCA – the costs of the latter are being recovered over a 10 year period from 2016/17.

The FCA’s pension deficit increased in 2016/17 to around £300m by 30 June 2016 with the result that the FCA is increasing its annual contribution to the deficit from £19.5m to approximately £29m from 2018 until 2027 – on top of an additional £10m in 2016/17.

The FCA is forecasting an underspend in the 2016/17 period in the ORA budget of around £10m, which will be retained to mitigate future costs such as the proposed office move in 2018 to Stratford (The International Quarter).

Comments are invited by 9 June 2017. The intention is to publish a Policy Statement incorporating the final fees etc. at the end of June/early July. The FCA informs us that fee and levy rates in CP17/12 are based upon estimated fee-payer population and tariff date and so the final rates could well vary from those in this Consultation Paper.

The FCA has also updated its fees calculator – which allows firms to calculate their fees for the forthcoming period (the FCA’s financial year runs from 1 April to 31 March) – to reflect the draft fees and levies (e.g. FOS, FSCS etc.) set out in CP17/12.