These 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 amount payable by each firm will depend upon the category (or categories) of regulated activities it is engaged in (fee-blocks), and on the amount of business it conducts in each category (tariff base).
Incoming EEA firms and incoming Treaty firms receive a discount to reflect the reduced scope of the FSA's responsibilities in respect of them. The level of the discount varies from fee-block to fee-block, according to the division of responsibilities between the FSA and Home state regulators for firms in each fee-block - see SUP 20.4(Modifications).
Paragraph 17(2) of Schedule 1 to the Act prohibits the FSA from taking account of penalties received when setting its periodic and other fees. Accordingly each SUP 20 Annex 2 will set the periodic fee without reference to the penalties received. The FSA will allocate the penalties by way of a permitted deduction specified in SUP 20 Annex 2 for the relevant year. The FSA normally expects to allocate those deductions so that they apply to the fee blocks within which the firms paying penalties fall. 2