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Status: You are viewing the version of the handbook as on 2005-06-30.

MIGI 19.2 FSA fees

How do FSA fees work?

MIGI 19.2.1G

We have a number of 'fee-blocks', which group together firms carrying out similar regulated activities, reflecting the fact that they pose similar risks to our objectives. A firm may fall into one, or more than one, fee-block, depending on the scope of its permission.

What are application fees?

MIGI 19.2.2G

Any firm applying to us for authorisation has to pay an application fee. We also charge an application fee where currently authorised firms seek significant variations to their permission. Application fees must be paid whether or not the application is successful and are not refundable. This reflects the fact that we commit resources to applications when they are received, so all applications have a cost to us regardless of their outcome.

MIGI 19.2.3G

Application fees for mortgage and insurance mediation activities are flat rate fees (currently £1,500).

MIGI 19.2.4G

An authorised firm may seek to significantly vary the scope of its permission, and that variation, if granted, may cause it to fall into new fee-blocks it was not allocated to before the variation. In these cases, a variation of permission fee is payable, charged at 50% of the equivalent application fee that a new firm falling into the new fee-block(s) would pay.

MIGI 19.2.5G

Application fee rates for mortgage and insurance intermediaries are in AUTH 4 Annex 1.

What are periodic fees?

MIGI 19.2.6G

We use our periodic (annual) fees to recover the costs we expect to incur in undertaking our functions. From our budget each year we derive our Annual Funding Requirement (AFR). This total figure is split into an AFR for each fee-block, using our internal costing system. Typically, the permission granted to a firm advising on or arranging mortgages would cause the firm to be allocated to fee-block A.18. A firm carrying out non-investment insurance mediation would typically be allocated to the A.19 fee-block. If a firm is carrying out both types of activities it would be allocated to both fee blocks, and pay a fee in each.

MIGI 19.2.7G

The scale on which a firm undertakes activities is measured by each fee-block's 'tariff-base'. The tariff-base is a 'size of business' measure. The tariff-base for the A.18 and A.19 fee-blocks is based on the income a firm earns from carrying out mortgage mediation and insurance mediation activities, respectively. A further explanation of what counts towards the income of a firm conducting mortgage mediation activities, or insurance mediation activities, or both, can be found in SUP 20 Annex 2R Part 1. Note that this differs from the annual income calculation used for capital and PII requirements (see Part I Chapters 7 and 8).

MIGI 19.2.8G

By applying the tariff-base to its business a firm obtains its own 'individual tariff data'. The periodic fees for the firm can then be calculated by combining the firm's individual tariff data with the fee tariff rates for each fee-block it falls into. So, for each fee-block that a firm falls into, the fee calculation is:

Periodic fee = (tariff base data for firm) applied to (fee-block tariff rates)

MIGI 19.2.9G

The fee tariff rates for each fee-block are in SUP 20 Annex 2R

Where are the relevant Handbook sections?

MIGI 19.2.10G

The main sections of the FSA Handbook relating to fees that small firms should be aware of are:

  1. (1)

    general provisions regarding fees: GEN 3;

  2. (2)

    application fee rules: AUTH 4 and associated Annexes;

  3. (3)

    periodic fee rules, current rates per fee-block and fee-block definitions: SUP 20 and associated Annexes; and

  4. (4)

    permission variations: SUP 6 (SUP 6.3.22 R).

MIGI 19.2.11G

Firms should also be aware that in January of each year we produce a consultation paper indicating the proposed fee rates for the coming financial year (1 April - 31 March). The FSA Board makes the final fee rates for the financial year in May (with the exception of application fee rates, which are made in March, before the beginning of the financial year). Small firms should expect to receive a periodic fee invoice in June/July each year.

MIGI 19.2.12G

In June each year our Consolidated Policy Statement on our fee raising arrangements is updated. This document provides further detail on our fee policy, and you will find it under the Publications section of our website:www.fsa.gov.uk/Pages/Library/Policy/Policy/index.shtml

MIGI 19.2.13G

The following chapters of the Guide are also relevant:

Authorisation - Part I, Chapter 4

Variation of Permission - Part I, Chapter 16.1