FSA Fees

It’s that time of the year again when the FSA publishes proposals for the level of FSA fees payable for the year (the FSA year runs from 1 April to 31 March), being a combination – where relevant – of FSA, FSCS, FOS and CFEB (the Consumer Financial Education Body) fees and levies.

The link will take you to CP11/2 (‘Regulatory fees and levies: Rates proposals 2011/12’) which will provide further detail.

The bad news is that the FSA’s Annual Funding Requirement (AFR) of £500.5m (basically the amount of money that the FSA needs to raise from fees to fund its regulatory activities) has increased by 10.1% – which is marginally ahead of last year’s 9.9% increase. The good news is that most firms will pay less than last year once enforcement fines are factored in – the FSA returns fines to industry by way of fee discounts the following year.

By way of example, and as per Table 7.1, fee-block A.7 (fund managers) has a proposed AFR allocation of £28.2m (which in itself represents a 9% decrease from last year) which then benefits from a 16.5% reduction thanks to the distribution of enforcement fines.

Overall, according to Hector Sants, “… The actual amount we will be billing firms will be falling by 2%.”.

The FOS levy is less certain: the paper considers a levy of between £17.7m and £47.7m.

As is usual, the figures quoted in the paper are based upon incomplete data relating to actual costs, fee-block populations etc (complete data will not be available until the end of March), so the final fee rates could well vary.

The CFEB levy is covered in FEES 7 and applies to both incoming firms and any firm ‘having a Part IV permission’. For an overview of which firms can claim exemption (it is not automatic) from FSCS and FOS levies please see Regulatory Roundup 25.

The FSA publishes a Fees Calculator to help firms compute their fees.

Chapter 2 of the paper provides a summary of the FSA Business Plan for 2011/12 and is well worth a read for an insight into the FSA’s thinking. Despite the break-up of the FSA there is no suggestion that the Regulator has gone soft. Bullet points of note are:

  • Completing the organisational and technological change that underpins our move to an intensive supervisory regime (para 2.3)
  • Supervision will have increased resources(2.15)
  • Supervising Significant Influence Functions(basically all CF roles bar CF30 customer function) will be a major component of intensive supervision (2.15)
  • Continuing to deliver a tough and determined enforcement approach that achieves results (2.3)