Advisers to pay bulk of costs as FCA budget hits £519m

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The FCA has set its budget for 2016/17 at £519.3m, with advisers paying a greater share towards the regulator’s costs than banks, insurers and fund managers.

The FCA business plan and budget, published today, represents an 8 per cent increase on the £481.6m FCA costs for 2015/16.

Of this, financial services firms will pay £469.8m in regulatory fees, thanks to a £49.6m rebate from financial penalties. The Treasury is paid the amounts levied in regulatory fines less retained enforcement costs.

The FCA is proposing that £133m, or 28 per cent of the budget, will fall on investment advisers and mortgage and general insurance brokers.

Banks and mortgage lenders are set to foot around £128m of the regulator’s costs for the year, while insurers are expected to pay around £60m.

The remainder of the FCA’s budget will be met by fund managers, consumer credit firms and firms that fall outside of the stated business types.

Who is paying for the FCA’s budget in 2016/17?

FCA budget

Most of the costs stem from the FCA’s operating costs, or ongoing regulatory activity. This has gone up 5 per cent over the year from £479m last year to £502.9m.

Staff costs have gone from £279.9m to £316.8m, while enforcement costs have fallen from £10.7m to £8.3m.

Overall, the FCA says the increase in its budget has been driven by taking on responsibility for supervising the consumer credit market, as well as changes to accountability rules and the mortgage credit directive.

In a separate consultation on fees and levies for 2016/17, the FCA says it will keep the minimum fee, paid by 37 per cent of regulated firms, at £1,084.

Advisers in the A13 fee block will see their share of costs remain relatively flat at £73.7m.

FCA acting chief executive Tracey McDermott says: “Over the next year we will continue to embed a sustainable approach to regulation in everything we do.

“The majority of our resources remain devoted to our core business and today we have set out the outcomes we want our work to achieve.  Transparency is important to us, and this plan will give all stakeholders an understanding of our focus for the year ahead.”