FEES 2.1 Introduction

The provisions for late payments in FEES 2.2.1R do not apply to fees payable under FEES 3 as applications, notifications and requests for vetting are generally regarded as incomplete until the relevant fee is paid.

The purpose of this chapter is to set out the general provisions applicable to those who are required to pay fees or levies to FSA, case fees to FOS Ltd or a share of the FSCS levy.

Paragraph 17 of Schedule 1 and section 99 to the Act enable the FSA to charge fees to cover its costs and expenses in carrying out its functions. The corresponding provisions for the FSCS levy and FOS levies and case fees are set out in FEES 6.1, and FEES 5.2 respectively.

The FSA fees payable will vary from one financial year to another, and will reflect the FSA's funding requirement for that period and the other key components, as described in FEES 2.1.7G. Periodic fees, which will normally be payable on an annual basis, will provide the majority of the funding required to enable the FSA to undertake its statutory functions.

The key components of the FSA fee mechanism (excluding the FSCSlevy and FOS levy and case fees, which are dealt with in FEES 5 and FEES 6) are:

1. (1)

   a funding requirement derived from:

   1. (a)

      the FSA's financial management and reporting framework;

   2. (b)

      the FSA's budget; and

   3. (c)

      adjustments for audited variances between budgeted and actual expenditure in the previous accounting year, and reserves movements (in accordance with the FSA's reserves policy);

2. (2)

   mechanisms for applying penalties received during previous financial years for the benefit of fee payers;

3. (3)

   fee-blocks, which are broad groupings of fee payers offering similar products and services and presenting broadly similar risks to the FSA's regulatory objectives;

4. (4)

   a costing system to allocate an appropriate part of the funding requirement to each fee-block; and

5. (5)

   tariff bases, which, when combined with fee tariffs, allow the calculation of fees.

The amount payable by each fee payer will depend upon the category (or categories) of regulated activity or exemption, or other relevant activity applicable to that person (fee-blocks). It will, in most cases, also depend on the amount of the business that person conducts in each category (fee tariffs).

By basing fee-blocks on categories of business, the FSA aims to minimise cross-sector subsidies. The membership of the fee-blocks is identified in the FEES provisions relating to the type of fees concerned.

Paragraph 17(2) of Schedule 1 and section 99(3) to the Act prohibit the FSA from taking account of penalties received when setting its periodic and other fees. Accordingly periodic fees are specified without reference to the penalties received. However, the FSA normally expects to allocate those penalties to the fee-blocks within which the penalty payers fall, by way of a deduction from the periodic fee. Any deductions of this sort are set out in the relevant fees provisions or will be notified to the fee payer at the relevant time.