FCA publishes annual fees and levies consultation for 2020/21

The Financial Conduct Authority (FCA) has published its annual consultation paper CP20/06 covering proposed rates for regulated fees and levies in 2020/21. The consultation paper covers fees and regulatory levies for the FCA, Financial Ombudsman Service (FOS), and the Money and Pensions Service (MaPS). Members may access the document by clicking here.

The FCA said that despite having carefully reviewed budgets across the organisation to identify savings it still needed to increase its overall funding for 2020/21, in order that it could deliver its response to the Coronavirus (Covid-19) pandemic, continue its other critical work, prepare for withdrawal from the EU, and invest in its transformation programme.

Consequently, the FCA’s annual funding requirement (AFR) for 2020/21 would be increasing by 5.2% to £587.6 million. The FCA’s AFR includes its ongoing regulatory activities budget (up by 2% to £548.5 million), the costs it needs to recover for changes to its wider ongoing regulatory responsibilities and additional costs related to EU withdrawal.

The general insurance intermediary fee block (A.19) will see its contribution to the AFR increase by 3% to £29.9 million for 2020/21

The FCA proposed freezing the fees to be paid by the smallest 71% of financial services firms for next year (see chapter 4 of the document), so those firms that only pay minimum fees will see no change in the fees they pay.

To help medium sized and smaller firms the FCA proposed extending the period for paying their fees by two months to 90 days. This means that 89% of firms will have until the end of 2020 to pay their fees and levies. Larger firms will be expected to pay their fees under the usual payment terms.

Chapter 11 of CP20/06 looks at how the general levy for the Financial Ombudsman Service (FOS) is allocated between industry blocks. This year, the FOS has asked the FCA to recover £83.9 million through the general levy. This is an increase of £38 million compared to 2019/20, the increase is due to changes in the FOS funding model, as set out in its recently published strategic plans and budget. The general insurance intermediation industry fee block (I017) has been apportioned 8.9% of that levy.

The FCA also plans to collect an estimated £130 million for 2020/21 on behalf of The Money and Pensions Service (MaPS), this figure is up by 21% on the previous year. The total 2020/21 requirement includes amounts for the three levy components: £24.3 million for money guidance in the UK, £64.6 million for debt advice (to which GI brokers make no contribution) in England and £41.1 million for pensions guidance in the UK. The FCA said that these figures will be adjusted when any underspends against the levies paid in 2019/20 have been confirmed.

Consultation closes on 19th May 2020. Any comments or feedback about CP20/6 should be sent to David Sparkes at sparkesd@biba.org.uk by 5th May.

The FCA has provided a fees calculator facility on its website to enable firms to calculate their periodic fees for the forthcoming year, this can be found at:

https://www.fca.org.uk/firms/calculate-your-annual-fee/fee-calculator

The FCA will publish a policy statement in July, which will include its feedback about comments received in response to CP20/06 and the final rules.

BIBA members’ compliance and regulation queries should be directed to: compliance@biba.org.uk

The post FCA publishes annual fees and levies consultation for 2020/21 appeared first on British Insurance Brokers' Association.

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