COMP 13
Funding
COMP 13.1
Application and Purpose
- 01/12/2004
Application
COMP 13.1.1
See Notes
- 01/01/2004
COMP 13.1.2
See Notes
Firms which
are not participant firms (such
as certain types of incoming
EEA firms, service
companies and ICVCs)
are not required to contribute towards the funding of the compensation scheme.
- 01/01/2004
COMP 13.1.2A
See Notes
Although a member is a participant firm for the purposes of most
provisions of COMP,
a member is
excluded from the definition of participant
firm for the purposes of COMP 13
(see definition of participant
firm in Glossary).
This is because the fees levied in relation to the carrying on of insurance market activities by members will be imposed
on Society rather
than individually on each member (see COMP
13.4.21 R).
- 01/12/2004
Purpose
COMP 13.1.3
See Notes
The purpose of this chapter is to set
out the requirements on participant
firms to pay levies imposed by the FSCS to provide funding for its functions.
- 01/12/2001
COMP 13.2
General structure
- 01/12/2004
COMP 13.2.1
See Notes
Section 213(3)(b) of the Act requires the FSA to make rules to
enable the FSCS to
impose levies on authorised
persons in order to meet its expenses. These expenses include
in particular expenses incurred, or expected to be incurred, in paying compensation,
borrowing or insuring risks.
- 01/12/2001
COMP 13.2.2
See Notes
The FSCS may
impose two types of levy: a management
expenses levy, and a compensation
costs levy. In the first three full years of the operation of
the compensation scheme,
the FSCS may
impose an establishment
costs levy as part of a management
expenses levy. The FSCS has
discretion as to the timing of the levies imposed.
- 01/12/2001
COMP 13.2.3
See Notes
In calculating a compensation costs levy, the FSCS may include anticipated compensation costs for
defaults expected to be determined in the 12-month period following the date
of the levy. The total of all management
expenses levies attributable to a financial year will be restricted
to the amount set out on an annual basis in COMP
13 Ann 1 R.
- 01/12/2001
COMP 13.2.4
See Notes
In order to allocate a share of the amount
to be funded by an individual participant
firm, the funding arrangements are split into three sub-schemes: the accepting
deposits sub-scheme,
the insurance business sub-scheme,
and the designated investment business sub-scheme.
The business carried on by a participant
firm determines into which sub-scheme,
or sub-schemes,
it falls.
- 01/12/2001
COMP 13.2.5
See Notes
Within each sub-scheme there are one or more contribution groups. These
relate to different types of activity carried on by participant firms within each sub-scheme. Within a sub-scheme, individual participant firms are
allocated for funding purposes to one or more contribution groups, depending on their business
activities. This meets a requirement of section 213(5) of the Act that the FSA, in making rules
to enable the FSCS to
impose levies, must take account of the desirability of ensuring that the
amount of the levies imposed on a particular class of authorised person reflects, so far as practicable,
the amount of claims made, or likely to be made, in respect of that class
of person.
- 01/12/2001
The management expenses levy
COMP 13.2.6
See Notes
Section 223 of the Act (Management expenses) prevents the FSCS from recovering,
through a levy, any management
expenses attributable to a particular period in excess of the
limit set in COMP as
applicable to that period. 'Management expenses' are defined in section 223(3)
to mean expenses incurred or expected to be incurred by the FSCS in connection with its functions under
the Act, except:
(1) expenses incurred in paying compensation;
and
(2) expenses incurred as a result of the FSCS making the arrangements
to secure continuity of insurance set out in COMP 3.3.1 R and COMP
3.3.2 R or taking the measures set out in COMP
3.3.3 R and COMP 3.3.4 R when a relevant person is an insurer in financial difficulties.
- 01/12/2001
COMP 13.2.7
See Notes
A management
expenses levy under COMP may
consist of three elements. The first is a base costs levy, for the base costs of running
the compensation scheme in
a financial year, that is, costs which are not dependent upon the level of
activity of the compensation
scheme and which therefore are not referable to any specific
default. Included in this category are items such as the salary of the members
of the board of the FSCS,
the costs of the premises which the FSCS occupies,
and its audit fees. The amount that each participant
firm pays towards a base
costs levy is calculated by reference to the regulatory costs paid by the firm. All participant firms are
liable to contribute towards a base
costs levy.
- 01/12/2001
COMP 13.2.8
See Notes
The second element of a management expenses levy is
a specific costs levy for
the "specific costs" of running the compensation
scheme in a financial year. These costs depend on the number
of claims and types of default, and include the salaries of the staff of the FSCS and legal and other
professional fees paid in respect of particular defaults. The specific costs
are allocated to the contribution
group or groups of which the relevant personin default was a member, or which is responsible
for those costs under COMP,
on the basis of the protected
claims against that person.
The FSCS may
include in a specific
costs levy the specific costs that the FSCS expects to incur (including in respect
of defaults not yet declared at the date of the levy) during the financial
year of the compensation
scheme to which the levy relates. The amount that each participant firm pays
towards the specific costs
levy is calculated by reference to the amount of business conducted
by the firm in
each of the contribution
groups to which the FSCS has
allocated specific costs. Each contribution
group has a separate "tariff base" for this purpose, set out
in COMP 13.6.7 R. Participant firms may be exempt from contributing
to the specific costs
levy.
- 01/12/2001
COMP 13.2.9
See Notes
The third element of a management expenses levy is the costs of
establishing the FSCS.
The FSCS may
impose an establishment
costs levy only until the end of the third full financial year
of operation of the compensation
scheme. The amount that each participant firm pays towards the establishment costs levy is
calculated on the same basis as the base
costs levy, and all participant
firms are liable to contribute.
- 01/12/2001
COMP 13.2.10
See Notes
The FSA intends
to consult in January each year on the amount which it will set as the limit
on the management expenses attributable
to the forthcoming financial year of the FSCS.
- 01/12/2001
The compensation costs levy
COMP 13.2.11
See Notes
The compensation
costs levy is made up of the compensation costs which the FSCS has incurred and
has not yet recovered from participant
firms (less any recoveries it has made using the rights that
have been assigned to it), together with those compensation costs it expects to incur (including
in respect of defaults yet to be declared) over the 12 months following the
date of the levy.
- 01/12/2001
COMP 13.2.12
See Notes
Compensation
costs are principally the costs incurred in paying compensation.
Costs incurred in securing continuity of long-term insurance in safeguarding eligible claimants when
insurers are in financial difficulties, and in making payments or giving indemnities
under COMP 11.2.3 R are also treated as compensation costs. For funding purposes,
these costs are allocated by the FSCS,
and met by participant
firms, in the same way as specific
costs: see COMP 13.6.6 R.
- 01/12/2003
COMP 13.2.13
See Notes
If a participant firm is a member of more than
one contribution group,
the total compensation
costs levy and specific
costs levy for that firm will be the aggregate of the individual
levies calculated for the firm in respect of each of the contribution groups.
- 01/12/2001
Incoming EEA firms
COMP 13.2.14
See Notes
Incoming
EEA firms which obtain cover or 'top up' under the provisions
of COMP 14
are firms whose Home State scheme provides
no or limited compensation cover in the event that they are determined to
be in default. Under COMP 13.7,
the FSCS is
required to consider whether incoming
EEA firms should receive a discount on the amount that they
would otherwise pay as their share of the levy, to take account of the availability
of their Home State cover.
The amount of any discount is recoverable from the other members of the incoming
EEA firm's contribution
group.
- 01/12/2001
COMP 13.3
Exemption
- 01/12/2004
COMP 13.3.1
See Notes
(1) A participant
firm which does not conduct business that could give rise to
a protected claim by
an eligible claimant and
has no reasonable likelihood of doing so is exempt from a specific costs levy, or a compensation costs levy, or both, provided
that:
(a) it has notified the FSCS in writing that those conditions apply;
and
(b) the conditions in fact continue to apply.
(2) The exemption takes effect from the date
on which the notice was received by the FSCS,
subject to COMP
13.3.6 R.
- 01/02/2004
COMP 13.3.4
See Notes
A participant
firm which is exempt under COMP
13.3.1 R must
notify the FSCS in
writing as soon as reasonably practicable if the conditions in COMP
13.3.1 R no longer apply.
- 01/02/2004
COMP 13.3.5
See Notes
A participant
firm to which the conditions in COMP
13.3.1 R no longer apply will then become subject to COMP 13.4, 13.6, and 13.8
- 01/12/2001
COMP 13.3.6
See Notes
If a participant firm ceases to conduct business
that could give rise to a protected
claim by an eligible
claimant and notifies the FSCS of
this under COMP 13.3.1 R (1),
it will be treated as a participant
firm to which COMP 13.8.7 R applies
until the end of the financial year of the compensation scheme in which the
notice was given.
- 01/02/2004
COMP 13.3.7
See Notes
The
financial year of the compensation
scheme is the twelve months ending on 31 March.
- 01/02/2004
COMP 13.4
The FSCS's power to impose levies
- 01/12/2004
General limits on levies
COMP 13.4.1
See Notes
The FSCS may
at any time impose a management
expenses levy or a compensation
costs levy, provided that the FSCS has reasonable grounds for believing
that the funds available to it to meet relevant expenses are, or will be,
insufficient, taking into account:
(1) in the case of a management expenses levy, the level of the FSCS's anticipated expenditure
in respect of those expenses in the financial year of the compensation scheme in relation to which
the levy is imposed; and
(2) in the case of a compensation costs levy, the level of the FSCS's anticipated expenditure
in respect of compensation
costs in the 12 months following the levy.
- 01/12/2001
COMP 13.4.2
See Notes
The calculation of levies will also take
into account previous levies, where funds raised in anticipation of meeting
liabilities prove either more or less than the amount actually required.
- 01/12/2001
COMP 13.4.3
See Notes
The FSCS may
impose one or more levies in a financial year to meet either its management expenses or
its compensation costs.
The FSCS may
also impose interim levies, as part of its overall levy commitment. This flexibility
allows the FSCS to
phase its financing over the course of a financial year and thus avoid collecting
levies from firms before the money is actually needed. The FSCS has committed itself in the Memorandum
of Understanding with the FSA (the
text of which can be found on the FSA website
www.fsa.gov.uk) to publish regularly an indicative timetable for its levy
procedures
- 01/12/2001
COMP 13.4.4
See Notes
- 01/12/2001
Limits on compensation costs levies on sub-schemes
COMP 13.4.5
See Notes
The FSCS must
not require a participant
firm in the accepting deposits sub-scheme to pay a share of a compensation costs levy allocated
to that sub-scheme to
the extent that:
(1) the share in question; plus
(2) all previous amounts paid by the firm
either as its share of levies allocated to that sub-scheme, or under the Deposit Protection
Scheme (deducting from those amounts any amount refunded under COMP 13.4.17R - COMP 13.4.18R or by the
Deposit Protection Scheme);
amounts to more
than 0.3% of the firm's protected
deposits.- 01/12/2001
COMP 13.4.6
See Notes
The FSCS must
not require a participant
firm in the insurance business sub-scheme to pay a share of a compensation costs levy allocated
to that sub-scheme in
any financial year of the compensation
scheme, to the extent that the share in question, together with
all previous amounts paid by the firm as
its share of compensation
costs levies allocated to that sub-scheme in that financial year, amounts
to more than 0.8% of the participant firm's relevant net premium income.
- 01/12/2001
COMP 13.4.7
See Notes
The maximum amount of compensation costs for which the FSCS can levy the designated
investment business sub-scheme in
any one financial year of the compensation
scheme is limited to £400 million.
- 01/12/2001
COMP 13.4.7A
See Notes
The FSCS must not require
a participant firm in
the mortgage advice and arranging sub-scheme to
pay a share of a compensation
costs levy allocated to that sub-scheme in any financial year of the compensation scheme, to
the extent that:
(1) the share in question; plus
(2) all previous amounts paid by the firm as its share of compensation costs levies
allocated to that sub-scheme in
that financial year;
amounts to more
than 0.8% of the participant
firm's annual
eligible income.- 31/10/2004
COMP 13.4.7B
See Notes
The FSCS must not require
a participant firm in
the general insurance mediation sub-scheme to
pay a share of a compensation
costs levy allocated to that sub-scheme in any financial year of the compensation scheme, to
the extent that:
(1) the share in question; plus
(2) all previous amounts paid by the firm as its share of the compensation costs levy allocated to that sub-scheme in that financial
year;
amounts to more
than 0.8% of the participant
firm's annual
eligible income.- 31/10/2004
Levy for compensation costs paid in error
COMP 13.4.8
See Notes
The FSCS may
include in a compensation
costs levy the costs of compensation paid by the FSCS in error, provided
that the payment was made in good faith.
- 01/12/2001
Management of funds
COMP 13.4.9
See Notes
The FSCS must
hold any amount collected from a specific
costs levy or compensation
costs levy to the credit of the sub-schemes and relevant contribution groups, in accordance with the
allocation established under COMP 13.5.6
R and COMP 13.6.2
R.
- 01/12/2001
COMP 13.4.10
See Notes
Any funds received by the FSCS by way of levy or
otherwise for the purposes of the compensation
scheme are to be managed as the FSCS considers appropriate, and in doing
this the FSCS must
act prudently.
- 01/12/2001
COMP 13.4.11
See Notes
Interest earned by the FSCS in the management of funds held to the
credit of a contribution
group must be credited to that contribution group, and must be set off against
the management expenses allocated
to that contribution group.
- 01/12/2001
COMP 13.4.12
See Notes
The FSCS must
keep accounts which show:
- 01/12/2001
COMP 13.4.13
See Notes
The FSCS may
use the money collected from firms within one sub-scheme to pay compensation costs in respect of any contribution group within
that sub-scheme,
so long as it ensures that this is done without prejudice to the participant firms from
whom the money has been collected.
- 01/12/2001
COMP 13.4.14
See Notes
COMP 13.4.13
R means that, for example:
(1) when crediting interest underCOMP 13.4.11 R, the FSCS should regard any money collected from
one contribution group which
has been used to pay the compensation
costs of another contribution
group within the same sub-scheme as
standing to the credit of the first contribution
group; and
(2) the FSCS should
not raise a levy under COMP 13.4.1
R on a contribution
group solely because, as a result of the FSCS's action under COMP 13.4.13R, there appear to be insufficient
funds available to the credit of the contribution
group to meet its expenses.
- 01/12/2001
COMP 13.4.15
See Notes
(1) The FSCS may
use any money held to the credit of one sub-scheme (the
creditor sub-scheme)
to pay compensation costs in respect of another sub-scheme (the debtor sub-scheme) if the FSCS has reasonable grounds to believe that
this would be more economical than borrowing funds from a third party or raising
a levy.
(2) Where the FSCS acts in accordance with (1), it must
ensure that:
(b) the debtor sub-scheme pays interest at a rate equivalent
to the Bank of England's repo rate from time to time in force; and
(c) the amount lent by the creditor sub-scheme to the debtor sub-scheme is taken into
account by the FSCS when
considering whether to impose a compensation
costs levy on the creditor sub-scheme under COMP 13.4.1R.
- 01/12/2001
COMP 13.4.15A
See Notes
(1)
The FSCS may use any money
held to the credit of any sub-scheme to
repay borrowing from a third party incurred to pay establishment costs, if in the opinion of
the FSCS this
would be to the benefit of participant
firms.
(2) Where the FSCS acts in accordance with (1), it must
ensure that:
(a) future establishment costs levies are used first
to repay all amounts borrowed from the appropriate sub-schemes;
(b) interest is paid to the appropriate sub-schemes at a rate
equivalent to the Bank of England's repo rate from time to time in force;
and
(c) the amount lent by any sub-scheme is taken into account by the FSCS when considering
whether to impose a levy under COMP
13.4.1 R.
- 01/03/2003
COMP 13.4.16
See Notes
UnlessCOMP 13.4.17
R applies, any recoveries made by the FSCS in relation to protected claims must be credited to the contribution groups to
which the related compensation
costs were allocated.
- 01/12/2001
COMP 13.4.17
See Notes
If the FSCS makes recoveries in relation to protected claims where
the related compensation
costs were allocated to the accepting deposits sub-scheme, or in relation
to compensation paid out of a special contribution under the Deposit Protection
Scheme, and if the FSCS refunds
the recoveries underCOMP 13.4.18
R, it must ensure that, as far as possible, the recoveries
are refunded to the firms that
contributed to the relevant compensation
costs levy or special contribution (whether or not the firms are participant firms at the
time that the recoveries are made).
- 01/12/2001
COMP 13.4.18
See Notes
If the FSCS has more funds to the credit of a contribution group than
the FSCS believes
will be required to meet levies on that contribution
group for the next 12 months, it may refund the surplus to members
or former members of the contribution
group on any reasonable basis.
- 01/12/2001
Adjustments to calculation of levy shares
COMP 13.4.19
See Notes
The FSCS may
adjust the calculation of a participant
firm's share of any levy to take proper account of:
(1) any excess, not already taken into account,
between previous levies of that type imposed in relation to previous periods
and the relevant costs actually incurred in that period; or
(3) amounts that the FSCS has not been able to recover from participant firms as a
result of COMP 13.4.5R
or COMP 13.4.6R;
or
(4) amounts that the FSCS has not been able to recover from participant firms after
having taken reasonable steps; or
(5)
COMP 13.5.8R
(New participant firms), COMP 13.4.20R (Remission
of levy) or COMP 13.7
(Incoming EEA firms);
or
(6) anything else that the FSCS believes on reasonable grounds should
be taken into account.
- 01/12/2001
Remission of levy or additional administrative fee
COMP 13.4.20
See Notes
If a participant firm's share of a levy or an
additional administrative fee under COMP
13.8.4 R would
be so small that, in the opinion of the FSCS,
the costs of collection would be disproportionate to the amount payable, the FSCS may treat the participant firm as if
its share of the levy or additional administrative fee amounted to zero.
- 01/03/2003
Levies on the Society of Lloyd's
COMP 13.4.21
See Notes
The FSCS may
impose a levy on the Society to
be calculated as the aggregate of the levies that would be imposed on each member if this chapter
applied to members,
as follows:
(1) a share of any unexpired portion of an establishment costs levy;
(2) a proportionate share of a base costs levy in respect
of the compensation scheme's costs
for the period from 1 January 2004 to the end of the compensation scheme's financial year and
a share of such levies for all subsequent financial years;
(3) a specific
costs levy and a compensation
costs levy in respect of costs arising out of a relevant person being in default, arrangements
made under COMP 3.3.1 R or measures taken
under COMP
3.3.3 R where:
(a) the default occurs or the circumstances
giving rise to the arrangements being made or the measures being taken, as
the case may be, occur; and
(b) the protected
contracts of insurance in connection with which the costs arise
were entered into;
on or after
1 January 2004.- 01/01/2004
COMP 13.5
Management expenses
- 01/12/2004
Obligation on participant firm to pay
COMP 13.5.1
See Notes
- 01/12/2001
Limit on management expenses
COMP 13.5.2
See Notes
The total of all management expenses levies attributable to
a particular period of the compensation
scheme may not exceed the limit applicable to that period set
out in COMP
13 Ann 1 R.
- 01/12/2001
Participant firm's share
COMP 13.5.3
See Notes
A participant
firm's share of a management
expenses levy consists of one or more of:(1) a share of a base costs levy; and(2) a share of a specific costs levy; and(3) a share of an establishment costs levy.
- 01/12/2001
COMP 13.5.4
See Notes
The FSCS must
ensure that each participant
firm's share of a management
expenses levy separately identifies the firm's share of the base costs levy, specific costs levy and establishment costs levy.
- 01/12/2001
Base costs levy
COMP 13.5.5
See Notes
Unless COMP
13.4.19 R applies,
the FSCS must
calculate a participant
firm's share of a base
costs levy by:
(1) identifying the base costs which the FSCS has incurred, or expects to incur,
in the relevant financial year of the compensation
scheme, but has not yet levied;
(2) calculating the amount of the participant
firm's regulatory costs as
a proportion of the total regulatory
costs relating to all participant
firms for the relevant financial year; and
(3) applying the proportion calculated in
(2) to the figure in (1).
- 01/12/2001
Specific costs levy
COMP 13.5.6
See Notes
(1) The FSCS must
(subject to (2)) allocate any specific
costs levy amongst the sub-schemes and
relevant contribution groups in
proportion to the volume of relevant costs arising from, or expected to arise
from, claims in respect of the different activities represented by those contribution groups.
(2) The FSCS must
allocate any part of a specific
costs levy that relates to IFA
pensions review claims in accordance with COMP
13.6A.1 R (IFA pensions review compensation levies).
- 18/07/2002
COMP 13.5.7
See Notes
The FSCS must
calculate a participant
firm's share of a specific
costs levy (subject to COMP
13.4.19 R (Adjustments
to calculation of levy shares) and COMP
13.6A.1 R (IFA
pensions review compensation levies)) by:
(1) identifying each of the sub-schemes and relevant contribution groups within
those sub-schemes to
which the participant firm belongs,
using the statement of business most recently supplied under COMP 13.6.11 R;
(2) identifying the management expenses other than base costs or establishment costs which
the FSCS has
incurred, or expects to incur, in the relevant financial year of the compensation scheme, allocated
to the contribution groups identified
in (1), but not yet levied;
(3) calculating, in relation to each relevant contribution group, the participant firm's tariff
base as a proportion of the total tariff base of all participant firms in the contribution group, using the statement of
business most recently supplied under COMP 13.6.11 R;
(4) applying the proportion calculated in
(3) to the figure in (2); and
(5) if more than one sub-scheme or contribution group is relevant, adding together
the figure in (4) for each contribution
group.
- 18/07/2002
New participant firms
COMP 13.5.8
See Notes
A firm which
becomes a participant firm part
way through a financial year of the compensation
scheme will not be liable to pay a share of a specific costs levy made in that year.
- 01/12/2001
COMP 13.5.9
See Notes
New participant
firms will normally have relevant tariff bases of nil as at
31 December in the financial year preceding that in which they join, so that
they will not be required to pay a share of a specific costs levy (or a compensation costs levy because of COMP 13.6.6 R). COMP
13.5.8 R means that the FSCS does not have to estimate the tariff
base of a new participant
firm.
- 01/12/2001
COMP 13.5.10
See Notes
Since a firm that becomes a participant firm in the course of a financial
year of the compensation
scheme will already be obtaining a discount in relation to the base costs levy and the establishment costs levy through
the modified fee provisions of SUP 20.4.4,
no rule is necessary in COMP for
discounts on the base costs
levy or the establishment
costs levy.
- 01/04/2004
Establishment costs levy
COMP 13.5.11
See Notes
The FSCS must
calculate a participant
firm's share of an establishment
costs levy on the same basis as a base costs levy under COMP
13.5.5 R.
- 01/12/2001
COMP 13.5.12
See Notes
The FSCS may
not impose an establishment
costs levy after the end of the third full financial year of
operation of the compensation
scheme.
- 01/12/2001
COMP 13.6
Compensation costs
- 01/12/2004
COMP 13.6.1
See Notes
The compensation
costs levy is made up of compensation
costs incurred by the FSCS,
together with any compensation
costs which can reasonably be anticipated as arising in the
12 months following the levy date, and which in each case have not already
been subject to a levy.
- 01/12/2001
COMP 13.6.2
See Notes
(1) The FSCS must
(subject to (2)) allocate any compensation
costs levy to the individual sub-schemes and relevant contribution groups in proportion to the
volume of compensation
costs arising from, or expected to arise from, claims in respect
of the different activities represented by those contribution groups.
(2) The FSCS must
allocate any part of a compensation
costs levy that relates to IFA
pensions review claims in accordance with COMP
13.6A.1 R (IFA pensions review compensation levies).
- 18/07/2002
COMP 13.6.3
See Notes
If a participant firm which is in default has carried on a regulated activity other
than in accordance with a permission,
the FSCS must
allocate any compensation
costs or specific
costs arising out of that activity to the relevant contribution group which
covers that activity.
- 01/12/2001
COMP 13.6.4
See Notes
If the relevant person in default is an appointed representative,
the FSCS must
allocate any compensation
costs or specific
costs arising out of a regulated
activity for which his principal has
not accepted responsibility to the relevant contribution group for that activity.
- 01/12/2001
COMP 13.6.5
See Notes
A participant
firm must pay to the FSCS a
share of each compensation
costs levy unless either the firm is exempt under COMP 13.3 (Exemption) or the FSCS has chosen to exercise its discretion
under COMP
13.4.20 R in respect of that firm.
- 01/04/2004
COMP 13.6.6
See Notes
The FSCS must
calculate a participant
firm's share of a compensation
costs levy (subject to COMP
13.6A.1 R (IFA
pensions review compensation levies)) on the same basis as a specific costs levy under COMP
13.5.6 R, COMP
13.5.7 R and COMP
13.5.8 R.
- 18/07/2002
COMP 13.6.7
See Notes
When calculating a participant firm's share of a compensation costs levy or specific costs levy allocated
to:
(1) the accepting deposits sub-scheme or the insurance business sub-scheme, the FSCS must use the contribution groups and
tariff bases as set out in the table in COMP 13.6.8 R.;
(2) the investment business sub-scheme, the FSCS must (unless (3)
applies) use as the contribution
groups and tariff bases the correspondingly numbered activity
groups and tariff bases set out in part 1 and part 2 of SUP 20 Annex 1 which are identified in COMP 13.6.9 R;
(3) the investment business sub-scheme, where any
part of the levy relates to IFA
pensions review claims, the FSCS must comply with COMP
13.6A.1 R (IFA pensions review compensation levies);
(4) the mortgage advice and arranging sub-scheme, the FSCS must use the contribution group and tariff base set out
in the table in COMP 13.6.9A R;
(5) the general insurance mediation sub-scheme, the FSCS must use the contribution group and tariff base set out
in the table in COMP 13.6.9B R.
- 31/10/2004
COMP 13.6.8
See Notes
Table: Contribution Groups for the Accepting Deposits Sub-scheme and the Insurance Business Sub-scheme for the Financial Services Compensation Scheme (see COMP 13.6.7 R (1))
| SUB-SCHEME | CONTRIBUTION GROUP (references to A1, A2 etc are to the FSA fee Blocks) | LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order) | TARIFF BASE |
| Accepting deposits | A1 - deposit takers | Accepting deposits (article 5) | Protected deposits (see COMP 13.6.13R) |
| Insurance business | A3 - Insurance activities - General insurance | Effecting contracts of insurance and/or carrying out contracts of insurance (article 9) that are general insurance contracts | Relevant net premium income |
| Insurance business | A4 - insurance activities - Life Insurance | Effecting contracts of insurance and/or carrying out contracts of insurance (article 9) that are long-term insurance contracts | Relevant net premium income |
- 01/12/2001
COMP 13.6.9
See Notes
Table: The contribution groups and tariff bases for the investment business sub-scheme (see COMP 13.6.7 R (2)). (The contribution groups, legal bases for activity and tariff bases are the same as the correspondingly numbered activity groups and tariff bases set out in part 1 and part 2 of SUP 20 Ann 1).
| SUB-SCHEME | CONTRIBUTION GROUP (references to A7 etc are to the activity groups in part 1 of SUP 20 Ann 1R) | LEGAL BASIS FOR ACTIVITY (this is merely a summary of the basis in part 1 of SUP 20 Ann 1R; references to articles are to articles of the Regulated Activities Order) | TARIFF BASE (this is merely a summary of the base in part 2 of SUP 20 Ann 1R |
| Designated investment business | A7 - fund managers | Managing investments (article 33) | Funds under management |
| Designated investment business | A9 - managers of an AUT, ACDs and depositaries | Any of the following: (a) establishing, operating or winding up a collective investment scheme; (b) acting as a trustee of an authorised unit trust scheme; (c) acting as a depositary, or sole director of an open-ended investment company (article 48) | Gross income |
| Designated investment business | A10 - dealing as principal | Dealing in investments as principal (article 12). | Number of traders |
| Designated investment business | A12 - advisory brokers (excluding corporate finance advisers) - holding either client money or assets | Any of the following: (a) dealing in investments as agent (article 19); (b) arranging (bringing about) deals in investments (article 21(1)); (c) making arrangements with a view to transactions in investments (article 22(2)); with permission to: (i) advise on investments (article 49); (ii) hold client money; and (iii) safeguarding and administering investments (article 36) | Number of approved persons |
| Designated investment business | A13 - advisory brokers (excluding corporate finance adviser) - not holding either client money or assets | Any of the following: (a) dealing in investments as agent (article 19); (b) arranging (bringing about) deals in investments (article 21(1)); (c) making arrangements with a view to transactions in investments (article 22(2)); with permission to advise on investments (article 49); but not to (i) hold client money; and (ii) safeguard and administer investments (article 36). | Number of approved persons |
| Designated investment business | A14 - corporate finance advisory firms | Permission includes a requirement that the firm must not conduct designated investment business other than corporate finance business | Number of approved persons |
- 01/04/2004
COMP 13.6.9A
See Notes
Table: the contribution groups and tariff bases for the mortgage advisers and arrangers (see COMP 13.6.7 R (4))
| SUB-SCHEME | CONTRIBUTION GROUP (REFERENCES TO A1, A2 ETC ARE TO THE FSA FEE BLOCKS) | LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order) | TARIFF BASE |
| Mortgage advice and arranging | A18 - Mortgage lenders, advisers and arrangers | Any of the following: (a) arranging (bringing about) regulated mortgage contracts; (b) making arrangements with a view to regulated mortgage contracts; (c) advising on regulated mortgage contracts; (d) agreeing to carry on a regulated activity which is within any of the above; and (e) the activities of a mortgage lender which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts to which the arranger is a party). | annual eligible income |
- 31/10/2004
COMP 13.6.9B
See Notes
Table: the contribution groups and tariff bases for the general insurance intermediaries (see COMP 13.6.7 R (5))
| SUB-SCHEME | CONTRIBUTION GROUP (REFERENCES TO A1, A2 ETC ARE TO THE FSA FEE BLOCKS) | LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order) | TARIFF BASE |
| General insurance mediation | A.19 General insurance mediation | Any of the following in relation to a non-investment insurance contract: (a) dealing in investments as agent; (b) arranging (bringing about) regulated mortgage contracts; (c) making arrangements with a view to transactions in investments; (d) assisting in the administration and performance of a contract of insurance; (e) advising on investments; and (f) agreeing to carry on a regulated activity which is within any of the above | annual eligible income |
- 31/10/2004
COMP 13.6.10
See Notes
A participant
firm may belong to more than one sub-scheme, and more than one contribution group within
the same sub-scheme.
- 01/12/2001
COMP 13.6.11
See Notes
Unless exempt under COMP
13.3.1 R, a participant
firm must provide the FSCS by
the end of February each year with a statement of:
(1) the contribution
groups to which it belongs; and
(2) the total amount of business (measured
in accordance with the appropriate tariff base or bases) which it conducted,
as at 31 December of the previous year, in relation to each of those contribution groups.
- 01/12/2001
COMP 13.6.12
See Notes
If the information in COMP 13.6.11 R has been provided to the FSA under other rule obligations, a participant firm will
be deemed to have complied with COMP 13.6.11 R.
- 01/12/2001
COMP 13.6.13
See Notes
Where a participant firm can identify that a protected deposit was
made by a person who
is not an eligible claimant,
it may exclude the amount of that deposit from the tariff base, provided that
it notifies the FSCS of
the amount of the deposit so excluded and provides the FSCS with such information about the deposit
as the FSCS may
reasonably require.
- 01/12/2001
COMP 13.6.14
See Notes
Where a participant firm does not provide the statement
required by COMP 13.6.11 R,
the FSCS may
assess the firm for its share of the compensation
costs levy or the specific
costs levy on any reasonable basis (including on the basis of
the statement for the previous year), making such adjustments as seem appropriate
in subsequent levies once the true figures are known.
- 01/12/2001
COMP 13.6A
IFA pensions review compensation levies
- 01/12/2004
COMP 13.6A.1
See Notes
The FSCS must allocate any part of a specific costs levy or compensation
costs levy that relates to IFA
pensions review claims:
(1) to participant
firms which were liable to pay the PIA pensions review compensation costs levy
in 2001/2002; and
(2) in the same percentage share as that
levy (adjusted to distribute the share of any previous contributor, which
is not a participant firm,
among remaining participant
firms in accordance with their percentage shares).
- 18/07/2002
COMP 13.7
Incoming EEA firms
- 01/12/2004
COMP 13.7.1
See Notes
If an incoming EEA firm, which is a BCD credit institution,
an IMD insurance intermediary, an IMD reinsurance intermediary or ISD investment firm, is a participant firm, the FSCS must give the firm such discount (if any) as is appropriate
on the share of any levy it would otherwise be required to pay, taking account
of the nature of the levy and the extent of the compensation coverage provided
by the firm's Home State scheme.
- 01/12/2001
COMP 13.8
Payment of levies
- 01/12/2004
COMP 13.8.1
See Notes
A participant
firm must pay its share of any levy made by the FSCS:
(1) in one payment; or
(2) where the FSCS agrees, quarterly, at the beginning
of each quarter, by direct debit agreement.
- 01/12/2001
COMP 13.8.2
See Notes
The amount paid under a direct debit
arrangement will be adjusted on a continuous basis to take account of interim
levies and other adjustments made during the course of the financial year.
- 01/12/2001
COMP 13.8.3
See Notes
A participant
firm's share of a levy to which COMP 13.8.1 R (1) applies is due on, and payable within 30 days of, the date when
the invoice is issued.
- 01/12/2001
COMP 13.8.4
See Notes
If a participant firm does not pay its share of
a levy as required by COMP 13.8.3 R,
it must thereafter pay additional administrative fees based on the amount outstanding at a rate of 5% over
the Bank of England's repo rate from time to
time in force accruing on a daily
basis from the date on which the payment was due.
- 01/12/2001
COMP 13.8.5
See Notes
If a participant firm does not pay its share of
a levy subject to a direct debit agreement as required by COMP 13.8.1 R (2), the entire amount of the levy becomes
due and payable to the FSCS,
and additional administrative fees are payable at the rate set out in COMP
13.8.4 R.
- 01/12/2001
COMP 13.8.6
See Notes
If a participant
firm fails to make payment under COMP 13, the FSCS may:
(1) take steps to recover any money owed;
or
(2) refer the matter to the FSA so that the FSA may
take whatever disciplinary action it considers necessary; or
(3) do both (1) and (2).
- 01/12/2001
COMP 13.8.7
See Notes
If a firm ceases
to be a participant firm part
way through a financial year of the compensation
scheme:
(1) it will remain liable for any unpaid
levies which the FSCS has already
made on the firm; and
(2) the FSCS may
make a levy upon it (which may be before or after the firm has ceased to be
a participant firm, but must
be before it ceases to be an authorised person)
for the costs which it would have been liable to pay had the FSCS made a levy on all participant
firms at the time of the levy on the firm.
- 01/12/2001
COMP 13 Ann 1
COMP 13 Ann 1R: Management Expenses Levy Limit
- 01/12/2004
See Notes
This table belongs to COMP
13.5.2 R
| Period | Limit on total of all management expenses levies attributable to that period (£) |
| 1 December 2001 to 1 April 2002 | £4,209,000 |
| 1 April 2002 to 31 March 2003 | £13,228,000 |
| 1 April 2003 to 31 March 2004 | £13,319,000 |
| 1 April 2004 to 31 March 2005 | £17,590,000 |
- 20/10/2004