SIFA 18
Fees
SIFA 18.1
Fees
- 01/12/2004
SIFA 18.1.1
See Notes
The FSA is an independent, non-governmental body, which is funded
by levies on the financial services industry. We receive no funds from the
public purse.
- 09/09/2005
SIFA 18.1.2
See Notes
Broadly, we
use three main types of fee to finance our activities:
•periodic fees;•application
fees; and•special project
fees.
- 09/09/2005
SIFA 18.1.3
See Notes
Periodic
fees are paid annually, to provide most of the funding we require
to undertake our statutory functions.
- 09/09/2005
SIFA 18.1.4
See Notes
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.
- 09/09/2005
SIFA 18.1.5
See Notes
Special
Project fees recover part of the costs of specific regulatory activities
at the request of - and on behalf of - a fee-payer, where the activity primarily
benefits that fee-payer. It is unlikely that this type of fee would apply
to small firms.
- 09/09/2005
SIFA 18.2
Periodic Fees
- 09/09/2005
SIFA 18.2.1
See Notes
Fundamentally, three things decide the
fees that organisations have to pay us:
•what kind of
activities they undertake (a firm's permission);•the costs we
incur in regulating that class, or classes, of activities; and•the scale on
which they undertake those activities.
- 09/09/2005
SIFA 18.2.2
See Notes
According to the permission a firm has
with us, it is allocated to fee-blocks. Fee-blocks
categorise fee-payers together who offer broadly similar products and services,
ensuring they pay fees on a similar basis. The definitions of the fee-blocks
are based on sets of regulated activities.
- 09/09/2005
SIFA 18.2.3
See Notes
The cost we expect to incur in undertaking
our functions is known as our Annual Funding Requirement (AFR). This AFR is
split into an AFR for each fee-block, using our internal costing system.
- 09/09/2005
SIFA 18.2.4
See Notes
The scale on which firms undertake activities
is measured by each fee-block tariff-base.
Tariff-bases are proxies for potential impact, as indicated by the size of
the business reported by the tariff-base. Tariff-bases are usually different
for each fee-block.
- 09/09/2005
SIFA 18.2.5
See Notes
Tariff-bases combined with the fee-tariff
rates for each fee-block, allow the calculation of periodic fees for individual
fee-payers. So, for each fee-block, the fee calculation is:
Periodic fee = (tariff-base data for firm) x (fee-block tariff-rates)
Periodic fee = (tariff-base data for firm) x (fee-block tariff-rates)
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SIFA 18.2.6
See Notes
Typically, the permission (set of regulated
activities) granted to an independent financial adviser would cause the firm
to be allocated to fee-block A.13 (Advisers, arrangers, dealers and brokers
NOT holding and/or controlling client money and/or client assets).
- 09/09/2005
SIFA 18.2.7
See Notes
The tariff-base for this fee-block is
the number of approved persons, in customer functions 21, 22, 24, 25 and 26.
So firms falling into this fee-block would pay periodic fees based on this
measure, multiplied by the fee tariff-rates for the fee-block. The number
of approved persons used in the calculations is measured as at 31 December
in the year before the period to which the fee applies. For 2005/06 fees the
date is 31 December 2004.
- 09/09/2005
SIFA 18.2.8
See Notes
The fee tariff-rates for each fee-block
are in the FSA Handbook, in the Supervision Manual (SUP
20 Annex 1 R). SUP 20.3 sets
out the rules about the information on which fees are calculated. A firm must
send us any information required to calculate that firm's fee. In most cases
a firm will provide this information as part of its compliance with other
provisions of SUP.
- 09/09/2005
SIFA 18.3
Application Fees
- 09/09/2005
SIFA 18.3.1
See Notes
Any organisation applying to us for authorisation
or recognition has to pay an application fee. We also charge an application
fee where firms currently authorised 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.
- 09/09/2005
SIFA 18.3.2
See Notes
Application fees are flat rate fees that
vary according to the category of business for which authorisation is being
sought. For applicants that wish to become authorised persons there are three
main types of application fees:
•straightforward;•moderately complex;
and•complex.
- 09/09/2005
SIFA 18.3.3
See Notes
The complexity of an application is determined
by the fee-block(s) to which an applicant would be allocated if the application
were successful.
- 09/09/2005
SIFA 18.3.4
See Notes
Typically, applications from small firms
such as independent financial advisers would be classed as straightforward.
This reflects the fact that the typical permission profile of such firms would
allocate them to either fee-block A.12 or A.13. Applications for the activities
covered by these fee-blocks are deemed to be straightforward.
- 09/09/2005
SIFA 18.3.5
See Notes
An authorised firm may seek to significantly
vary its scope of permission, and that extension, if granted, may cause them
to fall into new fee-blocks they were not allocated to before the variation.
In these cases, a permission variation fee is payable. These fees are charged
at 50% of the equivalent application fee for the new fee-block(s).
- 09/09/2005
SIFA 18.3.6
See Notes
Application fee rates for each fee-block
are located in the FSA Handbook, in the Authorisation Manual (AUTH
4 Annex 1 RR).
- 09/09/2005
SIFA 18.4
Where Are The Relevant Handbook Sections?
- 09/09/2005
SIFA 18.4.1
See Notes
The main sections of the FSA Handbook
relating to fees that small firms should be aware of are:
•general provisions
regarding fees: GEN 3;•application
fee rules and current rates per fee-block: AUTH 4, AUTH
4 Annex 1 R;•periodic fee
rules, current rates per fee-block and fee-block definitions: SUP 20, SUP
20 Annex 1 R; and•variations of
permission: SUP 6.
- 09/09/2005
SIFA 18.5
Further Information
- 09/09/2005
SIFA 18.5.1
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). This paper now includes
levy consultations for the FOS and FSCS. 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.
- 09/09/2005
SIFA 18.5.2
See Notes
In June each year, we update our Consolidated
Policy Statement on our fee-raising arrangements. This document provides further
detail on our fee policy, and you will find it in the 'FSA Library'
section of our website.
- 09/09/2005
SIFA 18.5.3
See Notes
We currently send one bill to firms covering
both our fees and the FOS and FSCS levies. We are working in partnership with
the FOS and FSCS on plans that will allow firms to pay their fees by instalments.
In our Consultation Paper CP05/2 we requested feedback from the industry to
gauge the level of demand for a facility whereby firms could pay by instalments.
We received a positive response from firms and trade associations. A working
group of representatives from the FSA, FSCS and the Small Business Practitioner
Panel has taken forward this initiative after meeting with interested trade
associations and credit providers. In CP05/2 we are also providing a clearer
indication, through examples, of what firms' fees and levies will be - so
firms can budget more effectively.
- 09/09/2005
SIFA 18.5.4
See Notes
We are helping minimum fee-payers by
implementing minimum fee discounts. Firms pay only 50% of the minimum fee
where they hold permissions for activities they carry out as a minimal part
of their business. This means that a firm will not pay high fees if it does
a small amount of business in a fee-block in addition to its main source of
business.
- 09/09/2005
SIFA 18.5.5
See Notes
Our website contains further information
and questions and answers about the level of this year's fees - under 'Paying
Fees' and 'Fees for IFAs'.
| The following sections of the Guide are also relevant: | |
| • | 'Authorisation' - Chapter 6 |
| • | 'Variation of permission (VOP)' - Chapter 15.1 |
| • | 'Further information' - Chapter 19. |
| • | If you do mortgage or general insurance business you should also refer to MIGI 19. |
- 09/09/2005