Regulatory Fees and Levies for 2012/13

The Complyport Regulatory Alert of 3 February contained details of the FSA’s proposals on fees and levies for 2012/13. The alert advised that the final fees and levies would not be confirmed until approved by the FSA board.

PS12/11 – ‘Consolidated Policy Statement on our fee-raising arrangements and regulatory fees and levies 2012/13′ – has now been released confirming the final details.

The original proposal was to increase the FSA’s Annual Funding Requirement (AFR) – basically how much it needs to do the day job – by 15.6% from £500.5M to £578.4M.

The good news for firms is that the AFR has been reduced to £559.8M, an increase of 11.9% (but see below). A press release advises that the FSA “recognises the difficult economic circumstances for many firms and is committed to keeping any essential cost increases to a minimum”. Enforcement fines imposed by the Regulator (£70.7M for 2011/12) are returned to the industry by way of discounts to the AFR (“financial penalty discount”) so the actual total amount that needs to be invoiced will be reduced to £489.1M.

The bad news for firms is that as the financial penalty discount used is 18% lower than the previous year’s figure, the £489.1M that will be invoiced for 2012/13 is actually a real increase of 18.1% (see page 81 of PS12/1) across all the fee-blocks. The actual impact upon individual firms’ fees is more complicated as it is dependent upon a number of factors including the increase or decrease in the number of firms that make up each fee-block and year on year variations in a particular fee block’s tariff unit e.g. FUM or headcount.

Firms will be invoiced from June onwards with payment due within 30 days; page 7 of PS 12/1 contains a useful timetable. Those firms that do not like surprises can make use of the fees calculator to get an indication of their regulatory fees and levies.