The Financial Conduct Authority is to carry out a review into how it calculates firms’ regulatory fees which could see the current fee block model scrapped with fees allocated on an income or risk basis instead.
In its regulated fees and levies consultation paper, published today, the FCA set out plans to review the way it levies the industry and explore possible alternatives for how regulatory fees should be allocated.
The FCA says it wants to go “back to basics” and look at whether it should segment the industry when it comes to allocating fees.
It also wants to explore alternative ways of segmenting the industry to using the current fee block model, and look at alternative ways of how the regulator’s annual budget is allocated to segments such as the size measures used and when this is measured.
Options under consideration include not segmenting the industry and charging fees based on income, segmenting firms via fee blocks or risk categories, charging fees on a retrospective basis, and charging fees in different ways depending on the firms involved.
The FCA plans to consult on alternative ways of allocating fees in May. If the regulator decides on fundamental changes to the way fees are allocated, the earliest it will implement the changes is 2015/16. If it decides just to tweak the existing model, the earliest it will implement the changes is 2014/15.
The FCA says: “We are conscious of the other policy development demands we place on firms and their representatives. However, this coming first year we are operating seems an appropriate time to have an open dialogue with the industry on how we recover our funding from them.”
FCA starting point for fees review: