FSA Fees: Tariff Base Changes Update

The FSA’s consultation paper CP11/21 ‘Regulatory fees and levies: Policy proposals for 2012/12’ was covered in Regulatory Roundup 36.

The consultation paper included changes to the tariff base for ‘Advisory arrangers, dealers or brokers'(fee-blocks A.12& A.13 depending upon whether or not holding client money and/or assets) and ‘Corporate finance advisers’ (fee-block A.14). The proposal was to move away from the current head count basis to a ‘net amount retained’ basis (please see Regulatory Roundup 36 for further details).

As a result of feedback received, the FSA has decided to undertake a further impact assessmenton the proposed change to an income measure for these three fee-blocks. It is planned to publish the outcome of the impact assessment in the FSA’s October 2012 fees policy CP.

The feedback has also caused the FSA to enhance its guidance on calculating and apportioning income and in particular that relating to the risk of overlap between fee-block A.12 and fee-block A.7 (discretionary fund management).

Respondents wanted clearer distinction between income attributable to day-to-day fund management under fee-block A.7 and that attributable to activities under fee-block A.12 which are incidental to their overall management service. In such circumstances firms should exclude from their annual income calculation any regulated activities belonging to fee-block A.12 (or A.13 and A.14) where such activities are entirely incidental to the activity of managing investments. The revised guidance can be found in section 4.52 of Handbook Notice 118.

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