FSA/PN/152/2000
05/12/2000

There has been strong support from the industry for the FSAs proposal that an individual firms fee will be determined by the category of business it undertakes and the size of its business. The industrys responses are published today in a Feedback Statement to the FSAs consultation on setting fees when it takes over as the single statutory financial services regulator.

FSA Chief Operating Officer, Paul Boyle, said;

Our aim is to be cost-effective in meeting our responsibilities. Our fee-raising framework will provide the means by which the cost of our activities is spread fairly and proportionately among individual fee-payers.

New proposals for charging firms directly for non-routine work

To allow certain non-routine costs to be paid for by those companies that give rise to them, the FSA is now consulting on whether to charge directly for the costs of work that we do at their request. This would include work such as mergers, waiver requests, and the evaluation of models for calculating capital requirements. Charging such costs directly would correspondingly reduce the fees of other firms doing similar types of business.

Paul Boyle said,

We believe that this new idea for linking fees to non-routine activities requested by firms will be attractive to all fee-payers. Those firms with special requirements will find the FSA able to meet their requests more rapidly and flexibly. At the same time, other fee-payers will no longer be sharing the costs of non-routine work requested by other firms.

A firm foundation for the future

Many of the issues raised in the earlier consultation have been finalised in todays Feedback Statement, having either been agreed by the majority of respondents or slightly modified where there was a sufficient consensus in respondents views.

In particular, the concept of having fee-blocks based on categories of business, fundamental to the proposed architecture for our future fee-raising arrangements, was firmly endorsed. Also, we have substantially completed the arrangements under which fines arising from enforcement action will be rebated to authorised firms and listed companies.

Finishing off the structure

The FSA is now consulting on a narrower range of detailed aspects of its future fee-raising arrangements. The main issue is the basis for fee-tariffs. When the remaining issues have been resolved the FSA can finalise its future structure for charging fees and consult on the fee-tariff rates to apply after it takes up its full responsibilities in the second half of 2001.

Notes for editors

  1. The Response Statement to CP 56, and the new consultation, CP 79: Second Consultation on the FSAs post-N2 fee-raising arrangement, are published in a single document and is available on the FSAs website under Publications. CP56, published in June 2000 was entitled, The FSAs post-N2 fee-raising arrangements.

  2. 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; the protection of consumers; and fighting financial crime.

  3. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

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