Regulatory Fees

CP11/21 – ‘Regulatory fees and levies: Policy proposals for 2012/13’ – sets out the FSA’s proposals for changes in the fees and levy regimes.

For the avoidance of doubt the paper is only concerned with the method of calculating the charges; the budget (and hence level of fees) will not be known until January next year at the earliest.

‘Firms dealing as principal’ (fee block A.10) will find a subtle change in their tariff base in that they will have the option to move from being based upon number of traders to full-time equivalents. An example given is that an employee working a three-day week will result in a headcount of 0.6. The changes arise from an equality assessment impact: the current approach might be interpreted as a barrier in the career development of people wishing to work part-time or job share.

‘Advisory arrangers, dealers or brokers’ (fee blocks A12 & A13 depending upon whether holding client money and/or assets) and ‘Corporate finance advisers’ (fee block A.14) have a similar approach save that these three fee blocks are based upon the number of persons approved for CF30 (customer function) adjusted as necessary. By way of example, a firm in fee block A.12 will have to deduct from the total CF30 number those persons ‘solely acting in the capacity of an investment manager or solely advising clients in connection with corporate finance business or performing functions related to those’. This has been causing a headache for the FSA as whilst the regulator knows the total number of CF30s in a firm, it has to agree with firms the number of CF30s to use in calculating the fee – as may be recalled in 2007 the former customer functions of CF21 – CF27 were merged into a single CF30 function.

The paper therefore proposes to move the tariff base for these three fee blocks from a headcount basis to a ‘net amount retained’ basis. The latter will be basically the income from the relevant business derived from the activities in the specified fee block – although reference should be made to page 11 onwards of Annex B of CP11/21 for a fuller description.

Those firms that have eligible complainants (if you are unsure if this applies to you then please see Regulatory Roundup 25 for further information or speak to your usual Complyport contact) and are required to submit complaints reports to the FSA in line with DISP 1.10 should be aware that late or non-submission of these reports will result in an administrative fee of £250.

The consultation period ends 6 January 2012, except for the proposals on the changes to the tariff base for proprietary traders and fee-blocks A12 – A14 when the relevant date is 6 February 2012.

Although it is a consultation, firms may wish to draw the proposals to the attention of the relevant individuals/departments within their organisations so they can consider the need for any necessary changes to systems and procedures.