Tuesday, 30 November 2021 10:50
FCA set to nearly double minimum fee to £2,200
The FCA is planning to increase its minimum fee for firms from £1,151 to £2,200, it announced today.
In its fee proposals for 2022/23 (CP21/33) the FCA says the increase in the minimum fee firms pay is the first in a decade.
In the Consultation Paper the watchdog says the extra revenue generated will help invest in its plans to be a data-driven regulator. More staff will also be recruited.
The regulator also says the higher fee, “would better reflect the costs associated with the authorisation and supervision of 51,000 firms throughout the UK.”
The watchdog says it will spend £120m over the next three years to strengthen its ability to identify "firms and individuals" of concern and it needs to meet these costs.
The changes are designed to benefit both consumers and firms, the FCA says.
The FCA says it will consider all feedback on the consultation and expects to implement changes in time for the 2022/23 fee cycle. The deadline for comments on the consultation paper is 31 January. The FSCS levy will be considered in January.
The fee proposals will apply to all FCA fee-payers and any businesses considering applying for FCA authorisation or registration.
According to the FCA, about 37% of intermediary firms (part of the A block of membership) currently pay minimum fees.
Almost all FCA fee-blocks have a structure of minimum fees and variable fees. All firms in the fee-block pay a minimum fee, and then the larger ones pay variable fees on top.
Firms in the A fee-blocks pay a single minimum fee in fee-block A.0, currently £1,151, no matter how many A-blocks they fall into.
In the fee-blocks which use income as a metric, the most common threshold is £100,000 of regulated income. A financial intermediary in fee-block A.13 pays the A.0 minimum fee of £1,151 plus £2.443 per £1,000 on regulated income above the £100,000 threshold.
The FCA minimum fee has been frozen at £1,151 since 2020/21 to protect the smallest firms during the pandemic, the FCA said.
However, in April the FCA said that small firms who only pay minimum fees should make a contribution that "more fully" reflects the costs associated with FCA authorisation and ongoing supervision.
The FCA says in the new CP: "We have seen over recent years that the costs to customers of small firms can be high when things go wrong. We have to take a data-led approach to ensure effective oversight of the large number of small firms within our remit. That is why we are investing £100m in improving our technology so we can make the best use of our data and strengthen our capability for surveillance and intelligence to identify firms and individuals of concern.
"We recognise too that there is a high cost to firms, through levies under the Financial Services Compensation Scheme (FSCS), when their competitors fail. We are accordingly enhancing our scrutiny of applications for authorisation to reduce the possibility of unsuitable firms passing through the regulatory gateway. This includes recruiting more staff to strengthen our assessment of applications for approval by both firms and individuals."
• This is a developing story. Please check back later for further updates.
This page is available to subscribers. Click here to sign in or get access.