The FSA has announced its costs for 2011/12 will go up 10 per cent, from £454.7m to £500.5m, but costs paid by firms will fall as a result of fines levied during the last year.
The net minimum fee paid by 43 per cent of the FSA’s authorised firms, including many IFAs, will fall by 9.4 per cent from £925 to £844.
The fee-block for advisers not holding client money decreases 2 per cent from £40.6m to £39.7m, although the fee block for those handling client money increased 88 per cent, from £26.4m to £49.7m.
The regulator says any increase in costs will be borne by larger firms, reflecting the regulator’s more intensive supervision of “high impact firms”.
Enforcement fines levied by the FSA during the last year mean that in total firms will pay 2 per cent less than last year.
In the first nine months of 2010/11 the regulator collected a total of £79.1m compared to £33m in 2010.
The FSA also announced a 32 per cent increase in funding for the Consumer Financial Education Body, from £32.9m to £43.7m. Out of this total the adviser share has increased 33 per cent from £3.2m to £4.3m.
FSA chief executive Hector Sants says: “The completion of the FSA’s changes to move to a more intensive approach to financial services regulation has inevitably led to some increase in the authority’s cost base. However, we are very mindful of minimising the additional cost to firms and are pleased that net of enforcement fines, the actual amount we will be billing firms will be falling by 2%.
“Longer term, the implementation of new UK and EU policies, along with the cost of managing the transition to two new authorities will continue to put upward pressure on our cost base. However, in general, we would expect these increases to be borne by larger and more complex groups and would hope to minimise the impact on smaller firms.”
The FSA said in December that it would be carrying out less supervision of lower risk, smaller firms as it moves to the new regulatory structure.
Aifa policy director Andrew Strange says: “Although we welcome a reduced fee for the majority of IFAs, we must ensure there are better checks and balances in place under the new regulatory structure to prevent ever spiralling costs of regulation.
“We are pleased to see FSA again acknowledge a risk-based cost allocation approach. This must be extended to ensure that the IFA profession does not bear the cost of regulatory change introduced to tackle systemic risks posed by large institutions. In addition those IFA firms meeting the new regulatory requirements need less compliance and should therefore be rewarded through regulatory dividends.
“However, those IFA firms that hold client money will see an unjustified increase in their fees under the proposed structure. Despite holding client money this IFA model remains fundamentally low risk and should not be subject to such an increase in fees.”