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FEES 2.1 Introduction



621Except to the extent referred to in FEES 2.1.1A R, this1621120 chapter applies to every person who is required to pay a fee or share of a levy to the FSA, FOS Ltd or FSCS, as the case may be, by a provision of the Handbook.


621This chapter does not apply in relation to FEES 5.5A, FEES 5 Annex 2R or FEES 5 Annex 3R.


FEES 2.2.1R does not apply in respect of any fee payable under FEES 3 (Application, notification and vetting fees).


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 the5 FSAor a share of the FSCS levy.


Paragraph 17 of Schedule 1 to2 and section 99 of2 the Act,7 regulation 92 of the Payment Services Regulations and 3 regulation 59 of the Electronic Money Regulations 7 enable the FSA to charge fees to cover its costs and expenses in carrying out its functions. The corresponding provisions for the FSCS levy ,5 FOS levies and CFEB levies5 are set out in FEES 6.1,5 FEES 5.2 and FEES 7.1.4 G5 respectively. Case fees payable to the FOS Ltd are set out in FEES 5.5A. 621 Fee-paying payment service providers and fee-paying electronic money issuers 7 are not required to pay the FSCS levy but are liable for FOS levies.4


3Regulation 92 of the Payment Services Regulations and regulation 59 of the Electronic Money Regulations each provide7 that the functions of the FSA under the respective7 regulations are treated for the purposes of paragraph 17 of Schedule 1 to the Act as functions conferred on the FSA under the Act. Paragraphs 17(2) and (3) however, have not been included .7 These are, respectively, the FSA's7 obligation to ensure that the amount of penalties received or expected to be received are not to be taken into account in determining the amount of any fee payable and the provision that allows fees to be raised to repay borrowed monies in respect of expenses incurred, before or after the coming into force of the Act or the Bank of England Act 1998.


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 FSCS 5levy, the FOS5 levy and case fees, and the CFEB levy 5which are dealt with in FEES 5,5 FEES 6 and FEES 7)5 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.

FEES 2.1.10G

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.

FEES 2.1.11G

3Whilst paragraph 17(2) of Schedule 1 to the Act has not been applied to the fee-raising power of the FSA under the Payment Services Regulations and the Electronic Money Regulations,7 regulation 92(2) and 59(2)7 of these regulations respectively require7 the FSA to apply amounts paid to it by way of penalties imposed under these7 regulations towards expenses incurred in carrying out its functions under the regulations, or for any incidental purpose.