The Financial Conduct Authority (FCA) has set out the fees and levies due for the 2022-23 financial year.
These will need to be paid by all FCA-regulated firms and those looking to get authorisation as well.
The total annual funding requirement (AFR) for the current financial year is £630.9m – a £17.2m (2.8%) rise from the 2021-22 figure. This is a £10m reduction from its £640m ($802m, €749m) forecast in April 2022.
The watchdog added that the changes it made in lowering the AFR will also result in a reduction in payable fees to £581.5m from the predicted £591m.
This was possible because the FCA is:
- Phasing the increase in minimum fees for smaller firms over four years rather than three;
- Uplifting the charges for appointed representatives in line with inflation – from £287 to £266 – and for introducer appointed representatives – from £86 to £80; and
- Reducing the total amount of fees payable by retaining sufficient revenues from financial penalties to cover its 2021-22 enforcement costs – which is approximately £49.1m.
Advisers
In the breakdown, the A.13 fee block, which consists of advisers, arrangers, dealers and brokers, will face a 5.6% fee increase to £86.8m for 2022/23 financial year.
This is a slight rise from the FCA’s forecast in April – which proposed fees of £86.5m for the financial year.
The FCA estimates that the number of firms in the segment will fall by 2.1% to 11,651 in the 2022/23 financial year. This is drop from 11,901 a year before.
The fees received by the regulator will be used to fund:
- The FCA;
- The Financial Ombudsman Service;
- The Money and Pension Service;
- Devolved authorities (in Scotland, Wales and Northern Ireland); and
- The Treasury’s expenses in funding the teams that tackle illegal money lending.
Crypto
Also, the FCA explained it allocates the AFR across fee-blocks “according to the previous year’s distribution, except where there are clear and material reasons for making exceptional increases or decreases for individual fee-blocs” – also known as ‘allocation by exception’.
In 2022-23, the only allocation by exception arises from the ‘cryptoasset scope change project’. This means that the costs needed to bring “certain cryptoasset business into supervision” under money laundering regulations (MLRs) will need to be recovered among all fee-payers subject to these rules.
The regulator said: “We would normally recover these costs directly from the businesses affected, but businesses in this sector are often extremely complex and about 80% of applicants have been rejected by us or have withdrawn their applications.
“We expect around 50 cryptoasset businesses to be registered. We would have had to increase their fees by up to 300% to recover the £8m project costs from them. We believe this would be disproportionately high for a restricted supervisory regime under the MLRs which does not involve conducting regulation under the Financial Services & Markets Act.
“Because they are supervised under the MLRs, we have restricted cost recovery to those fee-blocks where the majority of fee-payers are subject to MLRs.”
But this payment is only to spread the cost recovery of the project set-up, the FCA said, as cryptoasset businesses “will pay the full costs of their annual supervision, coming to £3.01m per year”.
“The fee-rate for 2022-23 is £4.03 per £1,000 of supervised income, and we have set the minimum fee at £2,000.”
Other initiatives for which the FCA is recovering costs that affect all firms include the transformation programme (£10m); the financial promotions project (£2.4m) and the consumer harm campaign (£2.3m).
