FSCS levy
The FSCS has today announced that its initial levy will be £160.7 million, down from the £202.9 million that was forecast in CP05/2. (For further details please see the FSCS announcement at www.fscs.org.uk)
The main variances are:
| Fee block | Movement (£) | Who does this affect? |
| A3 | - 17m | General insurance brokers |
| A7 | -26.8m | Fund managers, stockbrokers |
| A12 | -3.7m | Stockbrokers, some IFAs |
| A13 | +7.4m | Mainly IFAs |
It is anticipated that fee blocks A7 (fund managers and stock brokers), A9 (collective investment scheme managers), A12 (stockbrokers and IFAs) and A13 (mainly IFAs) may be affected by the administration of Exeter Fund Managers. The FSA will work with the FSCS and the administrators to establish the impact, if any, of resultant liabilities on each fee block.
Examples of fee and levy calculations for firms were published in CP05/2. The FSCS levy announced today has increased the total figure for the A13 (mainly IFAs) fee block. To help these firms budget, the A13 examples have been updated and placed on the FSA website.
Payment of fees by instalment
The FSA has established a working group, which includes the Small Business Practitioner Panel and trade associations, to introduce a market-based system that will allow small firms to pay their fees invoices by instalment. It is one of a number of initiatives outlined in this year's Business Plan to make the FSA easier to do business with for small firms. The FSA is facilitating discussions between the working group and three possible credit providers to make payment by instalment possible. If such a scheme can be created it will be launched before 2005/06 invoices are sent to small firms.
Changes to the funding structure of the regulatory system?
The fee block structure under which regulatory fees are charged to firms was developed in consultation with the financial services industry in 2001. The FSA has, at various times since, received representations from a number of groups seeking to have the agreed structure revised in order to reduce the proportion of regulatory costs paid by those they represent, thus increasing the proportion paid by others.
The FSA has therefore invited interested parties, including trade associations, the Office of Fair Trading, HM Treasury and the Financial Services Practitioner, Consumer and Small Business Panels, to a meeting on 28th April to discuss whether a review of the fee block structure should be considered. Any change would, of course, not affect the total funding requirement for the regulatory system but would change the formula under which costs are shared between regulated firms. The FSA would also be required to consult with all interested parties before any change could be implemented, making it unlikely that there could be any redistribution of regulatory costs before financial year 2007/08.
