The financial adviser fee block is set to see a 15 per cent increase in regulatory fees for 2013/14.
The Financial Conduct Authority has today published its consultation on regulatory fees and levies for the next financial year.
Out of the total £432.1m FCA budget, the industry will pay £391.5m, following £40.6m in retained FSA fines. Once these discounts are applied to the A13 fee block, which covers most financial advisers, advisers’ regulatory fees are set to go up by 15.5 per cent from £32.8m in 2012/13 to £37.9m in 2013/14.
The FCA estimates the number of advisers in the A13 fee block has fallen to 7,000 for 2013/14, compared to 7,086 in 2012/13. Changes in the way the regulator calculates tariff data on which fees are based, from number of advisers to income, makes it difficult to make comparisons about what firms will pay this year compared to last year.
The FCA says around 42 per cent of firms will continue to pay the minimum fee of £1,000.
Advisers in the A12 fee block, covering those advisers that handle client money, will see a 17.5 per cent fee increase from £38.6m to £45.3m.
Fund managers face a 15.7 per cent increase from £36.1m to £41.8m.
Mortgage brokers and home finance providers will see an 11.7 per cent rise in fees from £14m to £15.6m, while general insurance brokers face an increase of 14.6 per cent from £23.3m to £26.7m. Figures for advisers handling client money, fund managers, mortgage brokers and GI brokers are shown before FSA penalty discounts are applied.
Overall the annual budget for the FCA for 2013/14 is £432.1m and the combined FCA and Prudential Regulation Authority annual budget totals £646.3m, up 15 per cent from the FSA’s annual budget of £559.8m for 2012/13.
The combined budget for the FCA and PRA has been pushed up by a £34.4m increase in frontline supervision staff costs, a £43.9m increase in IT costs, and a £27.4m increase in central services and support functions costs.
It also includes £8.6m rise in accommodation and office costs, and £13.5m increase in other costs such as Libor enforcement case costs.
FCA chief executive Martin Wheatley says: “Our first year as a new regulator will be an exciting and challenging time but one for which we are well prepared. We are introducing new approaches to the way we do much of our work, becoming much more proactive and consumer focused.
“Much of the increase in the annual funding requirement is the result of the additional resources needed to ensure the FCA delivers on its new objectives, as well as the practical costs of implementing the new regulatory structure.”
Wheatley says the increases in the budget will be borne mainly by “larger and more complex groups”, but that medium-sized firms will also see a “proportionate increase”.
He adds: “We have, however, minimised the impact on smaller firms by keeping the minimum fee at £1,000 for the third year running. The FCA recognises the difficult economic circumstances for many firms and is committed to keeping any essential cost increases to a minimum.”