FCA fees update: Key takeaways as regulator to hike fees by 5.2%

money-staircase

The Financial Conduct Authority has published its latest fees update, with a consultation set to run into May.

The FCA has proposed increasing its annual funding requirement for 2021/22 to £616.5m, a 4.5% rise on the previous year.

This is expected to be made up of £566.1m in fees – which represents a 5.2% rise – and a financial penalty rebate of £50.4m

General insurers would have seen a slight fall in their funding requirement to £28.4 from their block, down from £28.6m last year. However, they will also have to cover a £7.4m surcharge as the authority looks to recoup the costs of the business interruption legal test case.

They are though projected to benefit from a £1.6m share of the rebate.

Under the consultation, which runs until 25 May, brokers are facing a 1.3% uplift in their funding requirement before the rebate to £30.4m.

According to the FCA there are 13,057 firms in the general insurance mediation block. The sector’s rebate is forecast to be £2.9m accounting for nearly 10% of the total.

Claims management companies came under the auspice of the FCA in April 2019. The fee for this group has been projected at £1.8m, some 36.8% below the 2020/21 total. The number of businesses in the subset has dropped 6.2% year-on-year from 721 to 676, according to the watchdog’s document.

The breakdown of the £616.5m total showed a new £10m charge for appointed representatives. The budget included £10m for EU withdrawal costs down from £15m in the previous year.

It also included £10m for the FCA’s transformation programme investing in systems and capabilities to enable better use of data and intelligence to regulate some 56,000 firms. This was the same as the amount allocated the year before as was the £2.3m for its five-year consumer harm campaign.

The regulator highlighted that it was keeping minimum fees unchanged for 2021/22 “to help protect the smallest firms from the impact of Covid-19”. However it also noted that it will be conducting a wider review of its fees structure, including all minimum fees, as part of its transformation programme and will consult on the resulting proposals.

The consultation paper detailed that the Financial Ombudsman Service had asked the FCA for £96m through the general levy. This is an increase of just over £12m, or 14%, compared to last year.

The document also addressed the Financial Services Compensation Scheme. As previously reported by Post the total levy for 2021/22 is poised to break £1bn with brokers on the hook for £146.8m.

“We have acknowledged that the current cost of the FSCS levy for certain firms is too high, especially at a challenging time for all businesses,” the FCA updated.

The authority committed to taking action to tackle increasing regulatory costs through a stronger focus on firms and individuals who do not meet the required standards.

“This includes a firmer approach to firms applying for authorisation and making better use of data and intelligence to identify harm caused by authorised firms,” it detailed.

The FCA concluded that final fee rates are expected to be set in June.

Adding: “We also want to work towards a system where firms which cause redress liabilities end up paying more of the bill before recourse is needed to the FSCS. This would be fairer and would further incentivise firms to achieve good outcomes for consumers. It would benefit firms of all sizes.”

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.postonline.co.uk/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

Best Insurance Employer 2021

Between 15 March and 15 May Post invited insurance employees, through emails, social media and via the brand’s print and online channels, to nominate and rate their employers on a variety of aspects including their management, diversity, work/life balance and whether they would recommend the employer to a friend. More than 2300 responses were received and more than 50 firms were nominated.

You need to sign in to use this feature. If you don’t have an Insurance Post account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: