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Fee basis could shift from APs to firm’s income

The FSA wants to change the basis on which it calculates firms’ regulatory fees from the number of approved persons to a firm’s income.

The regulator’s consultation paper on regulatory fees and levies for 2012/13, published last week, proposes to change the tariff base for fee blocks A10, A12, A13, and A14. The A13 block covers most IFAs.

Fees for firms in these blocks are based on the number of approved persons registered under the CF30 function.

Approved persons were previously allocated to fee blocks according to their customer function, such as investment adviser or pension transfer specialist.

This changed under Mifid in October 2007, when the different customer functions were brought under the one CF30 function.

The regulator says this made it difficult to allocate approved persons to fee blocks.

The FSA says: “Working with an obsolete tariff base is inefficient and generates more work for us and firms. We need to establish a fair and more efficient way of calculating the fees for these blocks.”

It expects the income measure for regulatory fees to be implemented in 2013/14, with data based on income from firms’ financial years ending during 2012.

Firms will have to report their “regulated income”, defined as the net amount of income from advisory and consultancy charges, brokerages, fees commissions and related income from their regulated activities. It would include interest on income from regulated activities but would exclude rebates to customers and fees passed to other authorised firms. The FSA acknowledges that firms’ first year of reported income may include commissions which will not be allowed after the RDR.

Businesses will be able to report their income through section J of their retail mediation activities return. The FSA will write separately to firms that do not report their tariff data through the RMAR.

The FSA has already changed the basis for calculating the Financial Services Compensation Scheme levy to an income measure, which was introduced in the 2010/11 financial year.

The consultation on the proposals closes on February 6.


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  1. Terminology check – “approved perons” is right in the first para of this article, but then it drifts to the incorrect “authorised persons” further down. Authorised person is the correct term for the firm, approved persons are the people with CFs who work for it. Common mistake, but quite fundamentally alters the meaning

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