Published: 23rd December 2013

The FCA has published its annual consultation paper on fees and levies – “Regulatory fees and levies: policy proposals for 2014/15” (CP13/14). As the title suggests the paper only covers proposed policy changes; it will not be until around March next year that the FCA consults on fee rates.

Perhaps of most interest to investment firms is the proposed removal of fee block A12 and merging it into A13 (advisors, arrangers, dealers or brokers) and the introduction of fee block A21. The tariff base will continue to use income rather than head count (see Regulatory Roundup 45).

Currently the differentiation between the two fee blocks is whether client money and/or assets are held (A12) or not (A13). The purpose of the move is to remove an anomaly whereby firms that do not hold client money or securities pay a higher fee-rate per £1,000 that those firms that do hold client money or securities (the paper advises £6.89 per £1,000 vs. £2.39 per £1,000 respectively). Some firms in fee-block A13 have commented to the FCA that they could lower their fees by taking on the additional permission of holding client money and safe custody assets.

The new fee-block A21 will apply to those firms whose permissions include the safeguarding and administering of safe custody assets (without arranging) and who hold client money under the client money rules (note that this fee-block will not apply to those firms that control but do not hold client money). The fee tariff will be based upon the highest total amount of client money and/or safe custody assets held by a firm during the 12 months ending 31 December before the relevant fee year (1 April to 31 March inclusive).

The proposed changes to FEES can be found in Appendix 2 of CP13/14. We would remind firms whose business model means that they fall into both fee-blocks A7 (Portfolio managers) and A13 (Advisory etc.) that assets managed on a non-discretionary basis should be excluded from A7 as this activity is covered in those charged to fees in activity group A13.

The consultation period ends 6 January 2014.

Print this Page