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FCA levies could be based on risk as part of fees overhaul


The Financial Conduct Authority is to review how it calculates firms’ regulatory fees which could see the current fee block model scrapped and fees allocated on an income or risk basis.

Advisers are facing a 15 per cent hike in regulatory fees from £32.8m in 2012/13 to £37.9m in 2013/14. 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.

In its regulated fees and levies consultation paper, published this week, the FCA set out plans to explore alternative methods for allocating regulatory fees.

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 rather than using the current fee block model.

Options include charging fees based on income, segmenting firms via fee blocks or risk categories and charging fees on a retrospective basis.

The FCA plans to consult on its fees review in May. If it decides on fundamental changes, the earliest it will implement them is 2015/16. If it decides to tweak the existing model, the earliest it will implement the changes is 2014/15.

The FCA says: “This seems an appropriate time to have an open dialogue with the industry on how we recover our funding.”

Clearwater Financial Planning managing director Duncan Carter says: “The idea of basing fees on risk is an interesting one, but would need a lot of practitioner input.”


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