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FEES App 1 Annex 2 Further information on fees

G

Purpose

1

The purpose of this annex is to set out further information on fees applicable toregistered societies which form the registrant-only fee block (Category F).

Background

2

Paragraph 23 of Schedule 1ZA1 to the Act enables the FCA1 to charge fees to cover its expenses in carrying out its functions.

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3

The fees payable by registered societies will vary from one financial year to another and will reflect the FCA's funding requirement for the registrant-only fee block.

4

For periodic fees, the key components of the fee mechanism are:

(1)

a funding requirement derived from:

(a)

the FCA's financial management and reporting framework;

(b)

the FCA's budget;

(c)

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

(2)

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

(3)

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

(4)

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

(5)

The FCA defines fee blocks so that they will depend, for the most part, upon the regulated activities included in the permission held by firms, with a separate fee block for mutual societies which do not conduct regulated activities (registrants). By basing fee blocks on categories of business, the FCA aims to minimise cross-sector subsidies. The funding requirement for the registrant-only fee block will accordingly reflect only the cost of the registration function plus a share of corporate overheads. It will not include any indirect regulatory overheads.

Recovery of fees

(6)

Paragraph 23(8) of Schedule 1ZA1 to the Act permits the FCA1 to recover fees as a debt owed to the FCA1 and the FCA1 will consider court action for recovery through the civil courts.

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