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FSA/PN/058/2005
27 May 2005

The FSA today published the final Financial Services Authority fees and the Financial Ombudsman Service (FOS) levies for 2005/06 for regulated firms. In addition the FSA has announced a review of the funding regime.

Overall the majority of FSA fees for all firms are either reduced or have remained the same as those contained in the January 2005 Consultation Paper. This is due to the FSA’s funding requirement for 2005/06 being £6.6m less than originally forecast. Additionally in some fee blocks, the distribution of enforcement fines will reduce fees further.

Graeme Ashley-Fenn, FSA Director of Contact, Revenue and Information Management said: “In establishing the fee rates for 2005/06 the FSA has tried to ensure that the overall majority of small firms' fees will either see no increase or an inflation only increase compared to prior year. This recognises that for many smaller firms, regulatory fees are a significant element of their costs, and that cash flow is important."

"Regulatory fees are necessary for the FSA to undertake its statutory obligations, though we realise that we must drive down costs, wherever possible. We have fully engaged with the industry in an open and transparent way, which has provided a full understanding of their concerns. As a result we are pleased to announce that the FSA will undertake a review of the Funding Regimes. In addition, as announced earlier this month, we have facilitated a payment by instalment scheme, which should further assist firms with their cash flow, if they wish to take up this option."

The review of the funding regime will focus mainly on the Financial Services Compensation Scheme (FSCS) levy but may have consequential changes to the FSA and FOS arrangements. This work will be co-ordinated with the review on compensation and eligibility limits announced in the FSA’s Business Plan, and with the FSA's work on European developments including the Commission’s current review of the deposit guarantee schemes directive.

Graeme Ashley-Fenn said, "The FSA will continue to work closely with the industry; Practitioner and Consumer Panels and other key stakeholders. The aim is to publish proposals for consideration before the end of 2005"

Notes to editors

1. PS05/06 setting out the FSA's response to CP05/2 and the full fee tables for 2005/06 will be published on 27 May.

2. The attached tables indicate the regulatory FSA fees for 2005/06 for small firms in Fee Blocks A7 (Fund Managers) and A13 (Advisors, arrangers and dealers and brokers (not holding and/or arranging client money and/or assets) – with a comparison to their 2004/05 fees. The tables also include the 2005/06 fees and 2004/05 stub fees for small firms in Block A18 (Mortgage Advisers and Arrangers) and Block A19 (General Insurance Intermediaries) – with a comparison to the proposed Fees in CP 05/2. Collectively small firms in these four Fee Blocks make up a very large percentage of the FSA regulated population.

3. The Tables do not include fee reductions where applicable deriving from the £22.3 million regulatory fines levied by the FSA in 2004/05. Not all Fee Blocks in 2005/06 benefit from fine-related reduction benefit.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

 

Tables

 

Table 1

A7 – Fund Managers

Small firm example

Using constant tariff data as at 2004/05

Regulatory fees/levy 2004/05 Funds under Management £35million		Regulatory fees/levy 2005/06 Funds under Management £35million		% difference from 2004/05
FSA	£2,838	FSA	£2,631	(7.3)%
FSCS	£12	FSCS	£22	83.3%
FOS	£100	FOS	£100	0%
	£2950		£2,753	(6.7)%

 

 

Table 2

A13 – Advisors, arrangers, dealers and brokers (NOT holding and/or arranging client money and/or assets)

Small firm example

Using constant tariff data as at 2004/05

Regulatory fees/levy 2004/05 Approved persons CF21 – CF26: One		Regulatory fees/levy 2005/06 Approved persons CF21 – CF26: One		% difference from 2004/05
FSA	£1560	FSA	£1590	1.9%
FSCS	£707	FSCS	£1083	53.2%
FOS	£75	FOS	£50	(33.3)%
	£2342		£2,723	16.3%

 

Table 3

A.18 – Mortgage Advisers and Arrangers

Small firm example

Using constant tariff data as at 2004/05

As published in CP05/2 Annual Income: £70,000		Regulatory fees/levy 2005/06 Annual Income: £70,000		% difference from CP05/2
FSA Stub 04/05	£300	FSA Stub 04/05	£300	0%
FSA 05/06	£750	FSA 05/06	£550*	(26.7)%
FSCS	£20	FSCS	£18	(10)%
FOS	£50	FOS	£50	0%
	£1120		£918	18.0%

 

* Please note that the FSA Minimum Fee is £620. The amount of £550 above includes a £70 rebate following the rebate from the Mortgage Code Compliance Board (MCCB)

 

Table 4

A.19 – General Insurance Intermediaries

Small firm example

Using constant tariff data as at 2004/05

As published in CP05/2 Annual Income: £70,000		Regulatory fees/levy 2005/06 Annual Income: £70,000		% difference from CP05/2
FSA Stub 04/05	£100	FSA Stub 04/05	£100	0%
FSA 05/06	£500	FSA 05/06	£400	(20)%
FSCS	£13	FSCS	£9	(30.8)%
FOS	£50	FOS	£50	0%
	£663		£559	(15.7)%