Regulatory Fees and Levies

The FCA has published CP14/26 – “Regulatory fees and levies: policy proposals for 2015/16”.  As was the case in last year’s CP13/14 (see Regulatory Roundup 52), the purpose of the paper is to propose policy changes to the fee and levy regimes – a consultation on fee rates to be charged for 2015/16 will not appear until around March/April of next year.

As most will be aware there is a new regulator in being (Payment Systems Regulator (PSR) – a subsidiary of the FCA) – which will be responsible for the regulation of Visa, CHAPS, Bacs etc., although it will not be fully operational until next April.  The set-up costs of the PSR are expected to be in the order of £12m to £14m which CP14/26 proposes to reclaim in full in 2015/16 rather than recover over a period of time. This will be in addition to the ongoing regulatory activities cost, expected to be around £13m to £16m.

It was originally proposed that the pensions guidance levy (see CP14/11 – the FCA is required to recover the costs of providing pensions guidance from authorised firms and remit to Treasury) be raised from five fee-blocks including A.7 (portfolio managers), A.9 (managers and depositaries of investment funds and operators of collective investment schemes or pension schemes) and A.13 (advisory arrangers, dealers or brokers). The FCA acknowledges that not every firm in these fee blocks will provide retirement financial products and services and in the light of this CP14/26 proposes some modest adjustments including the exclusion of in-house managed Occupational Pension Schemes from A.7.  Table 4.1 in CP14/26 (page 29) shows the final proposed allocation of the pensions guidance levy with A.13 accounting for 12% whilst the remaining four fee-blocks each bear 22%.

FCA authorisation application fees, which have not changed since first set by the FSA in 2001, have also come under the microscope.  At that time these fees covered between 50% and 90% of FSA’s costs (straightforward cases and complex cases respectively) although as a result of inflation the fees now cover only around 35% of the FCA’s processing costs. For now, the FCA is not putting forward any proposals for consultation.

Elsewhere the paper proposes drafting changes to clarify ‘income’ in respect of fee-blocks A.9, A.13 and A.14 (corporate finance advisers).

Comments are invited by 2 February 2015.