MIGI 19
Fees
MIGI 19.1
Introduction
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MIGI 19.1.1
See Notes
We are an independent, non-governmental
body, which is funded by levies on the financial services industry. We receive
no funds from the public purse. Broadly, we use three main types of fee to
finance our activities:
(1)
Application fees contribute to
the cost of processing applications for authorisation or recognition, or requests
for significant variations to the permission of firms that are already authorised.
(2)
Periodic fees are paid annually,
to provide most of the funding we require to undertake our statutory functions.
(3)
Special Project fees. These are
unlikely to apply to small firms, so they are not covered in this Guide.
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MIGI 19.1.2
See Notes
This chapter explains more about application
fees and periodic fees and how we propose that they will apply to your firm.
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MIGI 19.2
FSA fees
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How do FSA fees work?
MIGI 19.2.1
See Notes
We have a number of 'fee-blocks', which
group together firms carrying out similar regulated activities, reflecting
the fact that they pose similar risks to our objectives. A firm may fall into
one, or more than one, fee-block, depending on the scope of its permission.
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What are application fees?
MIGI 19.2.2
See Notes
Any firm applying to us for authorisation
has to pay an application fee. We also charge an application fee where currently
authorised firms seek significant variations to their permission. Application
fees must be paid whether or not the application is successful and are not
refundable. This reflects the fact that we commit resources to applications
when they are received, so all applications have a cost to us regardless of
their outcome.
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MIGI 19.2.3
See Notes
Until the date we begin to regulate mortgage
and insurance intermediaries in October 2004 (NM) and January 2005 (NGI) respectively,
application fees for firms wishing to carry out mortgage and insurance mediation
activities are tiered depending upon a firm's income level. Discounts apply
depending on when, and how, a firm applies for authorisation. We will consult
in 2004 on how application fees for these activities will be set after NM
and NGI.
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MIGI 19.2.4
See Notes
An authorised firm may seek to significantly
vary the scope of its permission, and that variation, if granted, may cause
it to fall into new fee-blocks it was not allocated to before the variation.
In these cases, a variation of permission fee is payable, charged at 50% of
the equivalent application fee that a new firm falling into the new fee-block(s)
would pay.
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MIGI 19.2.5
See Notes
Application fee rates for mortgage and
insurance intermediaries up to NM and NGI are in AUTH
4 Annex 2.
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What are periodic fees?
MIGI 19.2.6
See Notes
We use our periodic (annual) fees to recover the costs we expect to incur in undertaking our functions. From our budget we derive each year our Annual Funding Requirement (AFR). This total figure is split into an AFR for each fee-block, using our internal costing system. Typically, the permission granted to a firm advising on or arranging mortgages would cause the firm to be allocated to fee-block A.18. A firm carrying out general insurance mediation would typically be allocated to the A.19 fee-block. If a firm is carrying out both types of activities it would be allocated to both fee blocks, and pay a fee in each.
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MIGI 19.2.7
See Notes
The scale on which a firm undertakes
activities is measured by each fee-block's 'tariff-base'. The tariff-base
is a 'size of business' measure. We have stated that the
tariff-base for the A.18 and A.19 fee-blocks will be based on the income a firm earns from carrying out mortgage mediation
and insurance mediation activities, respectively. A further explanation of
what counts towards the income of a firm conducting mortgage mediation activities,
or insurance mediation activities, or both, can be found in
AUTH 4 Annex 2 Note
3.
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MIGI 19.2.8
See Notes
By applying the tariff-base to its business
a firm obtains its own 'individual tariff data'. The periodic fees for the
firm can then be calculated by combining the firm's individual tariff data
with the fee tariff rates for each fee-block it falls into. So, for each fee-block
that a firm falls into, the fee calculation is:
Periodic fee = (tariff base data for firm) applied to (fee-block tariff rates)
Periodic fee = (tariff base data for firm) applied to (fee-block tariff rates)
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MIGI 19.2.9
See Notes
The fee tariff rates for each fee-block
are in the SUP
20 Annexes. We will consult on tariff rates for the
2004/05 'stub' period for the A.18 and A.19 fee-blocks in the second quarter
of 2004.
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Where are the relevant Handbook sections?
MIGI 19.2.10
See Notes
The main sections of the FSA Handbook
relating to fees that small firms should be aware of are:
(1) general provisions regarding fees:
GEN 3
;
(2) application fee rules: and current rates per fee-block:
AUTH 4
and associated
Annexes;
(3) periodic fee rules, current rates per fee-block and fee-block
definitions: SUP 20 and associated Annexes;
and
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MIGI 19.2.11
See Notes
Firms should also be aware that in January
of each year we produce a consultation paper indicating the proposed fee rates
for the coming financial year (1 April - 31 March). The FSA Board makes the
final fee rates for the financial year in May (with the exception of application
fee rates, which are made in March, before the beginning of the financial
year). Small firms should expect to receive a periodic fee invoice in June/July
each year.
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MIGI 19.2.12
See Notes
In June each year our Consolidated Policy
Statement on our fee raising arrangements is updated. This document provides
further detail on our fee policy, and you will find it under the Publications
section of our website
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MIGI 19.2.13
See Notes
The following chapters
of the Guide are also relevant:
| Authorisation - Part I, Chapter 4 |
| Variation of Permission - Part I, Chapter 16.1 |
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