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Status: You are viewing the version of the handbook as on 2009-03-31.

FEES 6 Annex 4 Guidance on the calculation of tariff bases

G

1This table belongs to FEES 6.5.8 G

Calculation of gross income for firms who carry out discretionary fund management and are in sub-class D1

1.1

G

The calculation of gross income for the purpose of sub-class D1 should be based on the calculation of fees under fee block A9. Gross income for the activity of managing investments is the sum of the following:

(1)

the amount of the annual charge on all assets in portfolios which the firm manages on a discretionary basis received or receivable in the latest accounting period (this is calculated as a percentage of funds invested, typically 1% p.a.); plus

(2)

the front-end or exit charge levied on sales or redemptions of assets in portfolios which the firm manages on a discretionary basis (typically 4-5% of sales/redemptions) in that same accounting period; plus

(3)

the amount of performance management fees from the management of assets in portfolios which the firm manages on a discretionary basis received or receivable in that same accounting period; plus

(4)

any other income directly attributable to the management of assets in portfolios which the firm manages on a discretionary basis in that same accounting period, including commission and interest received.

1.2

G

Gross income should exclude:

(1)

income received or receivable from assets managed on a non-discretionary basis, being assets that the firm has a contractual duty to keep under continuous review but in respect of which prior specific consent of the client must be obtained for proposed transactions, as this activity is covered in sub-class D2 (the investment intermediation sub-class);

(2)

income that the firm has rebated to customers or passed onto other firms (for instance where there is a commission chain).

1.3

G

A firm should make appropriate arrangements to ensure that income is not double counted in relation to the activities it undertakes (for example, where it operates and manages a personal pension scheme or collective investment scheme).

Corresponding fee blocks

2.1

G

An example of a case covered by Note 2 in FEES 6 Annex 3R (Financial Services Compensation Scheme - classes and sub-classes) is as follows. The tariff base for sub-class C2 (Life and Pensions Intermediation) is based on approved persons, calculated on the same basis as the corresponding tariff base provisions for fee blocks A12, 13, and A14. However firms carrying on business originally falling within fee block A19 (e.g. in relation to pure protection contracts) can also fall into sub-class C2. The note means that FSCS may choose whether the calculation is based on the tariff base applicable to A12, A13, or A14.