Related provisions for FEES 6.3.20A

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Section 213(3)(b) of the Act requires the appropriate regulator to make rules to enable the FSCS to impose levies on authorised persons, and on recognised investment exchanges that are operating a multilateral trading facility or operating an organised trading facility,13 in order to meet its expenses. These expenses include in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks.
Section 224F of the Act enables the appropriate regulator to make rules to enable the FSCS to impose levies on authorised persons (or any class of authorised persons) in order to meet its management expenses incurred if, under Part 15A of the Act, it is required by HM Treasury to act in relation to relevant schemes. But those rules must provide that the FSCS can impose a levy only if the FSCS has tried its best to obtain reimbursement of those expenses from the manager of the
The FSCS may impose three 6types of levy: a management expenses levy (consisting of a base costs levy and a specific costs levy)9, a compensation costs levy and a MERS levy.6 The FSCS has discretion as to the amount and 9timing of the levies imposed.662
9The total amount of all management expenses levies attributable to a12financial year and levied by the FSCS under this chapter or under the PRA Rulebook12 will be restricted to the amount set out on an annual basis in FEES 6 Annex 1 R.
Section 223 of the Act (Management expenses) prevents the FSCS from recovering, through a levy, any management expenses attributable to a particular period in excess of the limit set in COMP as applicable to that period. 'Management expenses' are defined in section 223(3) to mean expenses incurred or expected to be incurred by the FSCS in connection with its functions under the Act, except:(1) expenses incurred in paying compensation;5(2) expenses incurred as a result of the FSCS
FEES 6.1.10GRP
A management expenses levy may consist of two 2elements. The first is a base costs levy, for 50% of12 the base costs of running the compensation scheme in a financial year12, that is, costs which are not dependent upon the level of activity of the compensation scheme and which therefore are not attributable to any specific class.9 The PRA allocates the other 50% of the base costs under its rules.12 Included in base costs12 are items such as the salary of the members of the board
10The second element of a management expenses levy is a specific costs levy for the "specific costs" of running the compensation scheme in a financial year12. These costs are attributable to a class, and include the salary costs of certain staff of the FSCS and claims handling and legal and other professional fees. It also may include the cost of any insurance cover that FSCS secures against the risk of FSCS paying out claims above a given level in any particular class (but below
FEES 6.1.13GRP
The15 limit on the management expenses attributable to the forthcoming financial year12 of the compensation scheme12 will be consulted on in January each year.1515
FEES 6.1.16GRP
If a participant firm is a member of more than one class9,2 the total compensation costs levy and specific costs levy for that firm in a particular year9 will be the aggregate of the individual levies calculated for the firm9 in respect of each of the classes for that year. Each class9 has a levy limit which is the maximum amount of compensation costs and specific costs9 which may be allocated to a particular class9 in a financial year12 for the purposes of a levy.29299299
The FCA has made rules providing that compensation costs and specific costs attributable to the classes (other than the deposit acceptors’ contribution class),14 and which exceed the classlevy limits, may be allocated to the retail pool. Levies allocated to the retail pool are then allocated amongst the other such classes, together with the deposit acceptors’ contribution class.14 The deposit acceptors’ contribution class14 may contribute to compensation costs levies or specific
The FSCS may at any time impose a management expenses levy or a compensation costs levy,6 provided that the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are, or will be, insufficient, taking into account expenditure already incurred, actual and expected recoveries and8:668(1) in the case of a management expenses levy, the level of the FSCS's expected8 expenditure in respect of those expenses in the financial year9 of the compensation
8The FSCS will usually levy once in each financial year9 (the annual levy)11. However, if the compensation costs or specific costs incurred, or expected to be incurred, exceed the amounts held, or reasonably expected to be held, to meet those costs, the FSCS may, at any time during the financial year9, do one or more of the following:8(1) impose an interim levy11 ; or(2) utilise other sources of funding such as commercial borrowing or other borrowing including from the National
8The FSCS may at any time impose a MERS levy provided that the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are or will be insufficient, taking into account relevant expenses incurred or expected to be incurred in the financial year of the compensation scheme in relation to which the levy is imposed9.
The maximum aggregate amount of compensation costs and specific costs for which the FSCS can levy each8class (including levies through the retail pool10)9 in any one financial year9 of the compensation scheme is limited to the amounts set out in the table in FEES 6 Annex 2 R.21029
FEES 6.3.11RRP
The FSCS must hold any amount collected from a specific costs levy or compensation costs levy to the credit of the classes2 in accordance with the allocation established under FEES 6.4.6AR and FEES 6.5.2-AR9. 228
FEES 6.3.13RRP
Interest earned by the FSCS in the management of funds held to the credit of a class must be credited to that class8, and must be set off against the management expenses or compensation costs2allocated to that class.822228
FEES 6.3.17RRP
(1) The FSCS may use any money held to the credit of one class2(the creditor class)2 to pay compensation costs or specific costs attributable 8or allocated by way of levy8 to 2another class2(the debtor class)2 if the FSCS has reasonable grounds to believe that this would be more economical than borrowing funds from a third party or raising a levy.228822(2) Where the FSCS acts in accordance with (1), it must ensure that:(a) the creditor class2 is reimbursed by the debtor class2
FEES 6.3.19RRP
Unless FEES 6.3.20 R applies, any recoveries made by the FSCS in relation to protected claims must be credited to the classes8 to which the related compensation costs was attributable.828
FEES 6.3.22RRP
The FSCS may adjust the calculation of a participant firm's share of any levy to take proper account of:(1) any excess, not already taken into account, between previous levies of that type imposed in relation to previous periods and the relevant costs actually incurred in that period; or(2) participant firms that are exempt from the levy under FEES 6.2; or(3) amounts that the FSCS has not been able to recover from participant firms as a result of FEES 6.3.5 R ; or2(4) amounts
A participant firm must pay to the FSCS a share of each management expenses levy.
The total of all management expenses levies (taken together with the management expenses levies under the PRA Rulebook)5 attributable to a particular period of the compensation scheme may not exceed the limit applicable to that period set out in FEES 6 Annex 1 R.
A participant firm's share of a management expenses levy consists of one or more of: (1) a share of a base costs levy and (2) a share of a specific costs levy.11
The FSCS must ensure that each participant firm's share of a management expenses levy separately identifies the firm's share of the base costs levy and1specific costs levy .11
Subject to3FEES 6.3.22 R, the FSCS must calculate a participant firm's share of a base costs levy by:33(1) for recognised investment exchanges, providing for £1,000 per RIE for each financial year of the compensation scheme (other than in the financial year in which the recognised investment exchange becomes a participant firm, when its share is nil);65335(2) for other participant firms:65533(a) identifying the base costs which the FSCS has incurred, or expects to incur, in the
4The FSCS must allocate, and calculate a participant firm’s share of, a8specific costs levy in the same way as for a compensation costs levy (see FEES 6.5).8(1) [deleted]8(2) [deleted]85
FEES 6.4.10GRP
COBS 19.6.2RRP
The restrictions on administration charges in COBS 19.6.4 R do not apply in relation to a default arrangement under which, at any time before benefits come into payment, those benefits accruing to the member involve, or involve an option to have, a promise by or to be obtained from a third party about the rate or amount of those benefits.
COBS 19.6.4RRP
A firm, for a default arrangement within a qualifying scheme, may only make, impose or otherwise facilitate payment of an administration charge1 by way of an accrued rights charge or a combination charge structure where:(1) the limits in COBS 19.6.6 R are not exceeded; or(2) the firm has obtained appropriate express agreement to exceed the limits and the following conditions are satisfied:(a) the express agreement contains an acknowledgement by the member that the administration
COBS 19.6.5GRP
The effect of COBS 19.6.4R (2)(c) is that a firm may not seek express agreement from a member to charges in excess of the limits for services which are obligatory under law, or form part of the core operation of the scheme. Such core services include, for example, designing and implementing an investment strategy, investing contributions to the scheme (to the extent that this would incur administration charges1), holding investments relating to scheme members and transferring
COBS 19.6.6RRP
The limits on administration charges are as follows: (1) for a qualifying scheme which uses only an accrued rights charge, 0.75% of the value of those accrued rights; (2) for a qualifying scheme which uses a combination charge scheme:(a) for the flat-fee charge element, £25 annually;(b) for the contribution percentage charge element, 2.5% of the contributions annually; (c) for the associated accrued rights charge, the limits as set out in column 2 of the table in COBS 19.6.7
COBS 19.6.7RRP
This is the table referred to in COBS 19.6.6 R.Contribution percentage charge rate (%)Accrued rights charge rate (%)1 or lower0.6Higher than 1 but no higher than 20.5Higher than 2 but no higher than 2.50.4Flat-fee charge (£)Accrued rights charge rate (%)10 or less0.6More than 10 but no more than 200.5More than 20 but no more than 250.4
COBS 19.6.8ERP
(1) To ensure that administration charges1 are within the limits set out in COBS 19.6.6 R:(a) a firm should calculate the value of accrued rights in an accrued rights charge as the arithmetic mean over a 12-month period of membership of the qualifying scheme, using at least four evenly-distributed reference points over that period;(b) a firm should calculate the value of contributions in a contribution percentage charge over a 12-month period of membership of the qualifying scheme
COBS 19.6.9RRP
(1) A firm must not make any administration charge,1 or otherwise make or facilitate any payment or provide any non-monetary benefit, in respect of any service provided by a third party in connection with a qualifying scheme which would have the effect of decreasing the value of the accrued rights of any member of that scheme.22(2) The restriction in (1) does not apply where the firm has obtained express agreement from the relevant member to such a payment.
COBS 19.6.11RRP
2A firm must not impose greater administration charges1 on a member of a qualifying scheme whose workplace pension contributions ceased on or after 6 April 2016 than those imposed on a member for whom such contributions are still being made.
The FSCS must allocate a compensation costs levy or specific costs levy, which has been allocated to the retail pool (under FEES 6.5.2-AR(2) or FEES 6.4.6AR32):(1) to classes whose levy limit3 has not been reached as at the date of the levy;(2) in proportion to the relative sizes of the levy limits3 of the classes in (1) and up to those levy limits32; and(3) in accordance with the table in FEES 6 Annex 2R; and32(4) a class’s share of a levy allocated to the retail pool must be
When the FSCS allocates excess compensation costs levies or specific costs levies under FEES 6.5A.1 R or any levy imposed under FEES 6.5A.2 R (3)(a), a class to which part of the excess is allocated (a "receiving class") may, as a result of that allocation, itself reach its limit. In that case, the FSCS must apply FEES 6.5A.1 R or FEES 6.5A.2 R so that any resulting excess levy beyond the limit of the receiving class is allocated amongst the remaining classes whose limits have
1A participant firm (but not a recognised investment exchange)2 must pay to the FSCS a share of each MERS levy.
The FSCS can impose a MERS levy only if the FSCS has tried its best and has failed to obtain reimbursement of those expenses from the manager of the relevant compensation scheme.
The FSCS must calculate a participant firm's share of a MERS levy on a reasonable basis.
If a firm ceases to be a participant firm or carry out activities within one or more classes54 part way through a financial year6 of the compensation scheme:44(1) it will remain liable for any unpaid levies which the FSCS has already made on the firm; and41(2) the FSCS may make one or more levies4 upon it (which may be before or after the firm5 has ceased to be a participant firm or carry out activities within one or more classes5,4 but must be before it ceases to be an authorised
12The FSCS must allocate any compensation costs levy:(1) first, to the relevant classes (other than the deposit acceptors’ contribution class)15 in proportion to the amount of compensation costs arising from, or expected to arise from, claims in respect of the different activities for which firms in those classes have permission up to the levy limit of each relevant class15; and(1A) next, amongst the categories (if any) within each class:15(a) in proportion to the categories’
If a participant firm which is in default has carried on a regulated activity other than in accordance with a permission, the FSCS must treat10 any compensation costs or specific costs arising out of that activity as if the relevant permission were held by the participant firm.1010410
If the relevant person in default is an appointed representative, the FSCS must treat10 any compensation costs or specific costs arising out of a regulated activity for which his principal has not accepted responsibility to as if the principal had accepted responsibility.1010410
FEES 6.5.16RRP
If a participant firm does not submit a complete statement by the date on which it is due in accordance with FEES 6.5.13 R and any prescribed submission procedures:(1) the firm must pay an administrative fee of £250 (but not if it is already subject to an administrative fee under FEES 4 Annex 2A R, Part 116 or FEES 5.4.1 R for the same financial year13); and16(2) the compensation costs levy and any specific costs levy will be calculated using (where relevant) the valuation or
(1) 3Subject to (3), a firm must calculate the specific risk portion of the interest rate PRR for each securitisation and resecuritisationposition by multiplying the market value of the individual net position (ignoring the sign) by the appropriate position risk adjustment from the table in BIPRU 7.2.48D R or BIPRU 7.2.48E R, or in accordance with BIPRU 7.2.48F R, as applicable.(2) In calculating the specific risk capital charge of an individual net securitisation or resecuritisation
(1) 3Subject to BIPRU 7.2.48J G, BIPRU 9.15.9 R and BIPRU 9.15.10 R, where the investor, originator or sponsor of a securitisation fails to meet any of the requirements in BIPRU 9.3.18 R to BIPRU 9.3.20 R (Disclosure requirements) and BIPRU 9.15.11 R to BIPRU 9.15.16 R (investor due diligence requirements) in any material respect by reason of its negligence or omission, the appropriate regulator will use its powers under section 55J (Variation etc. on the Authority's own initiative)
3When calculating the additional capital charge it will impose under BIPRU 7.2.48G R, the appropriate regulator will take into account the exemption of certain securitisations from the scope of BIPRU 9.15.3 R under BIPRU 9.15.9 R and BIPRU 9.15.10 R and, if those exemptions are relevant, it will reduce the capital charge it would otherwise impose.
3A securitisation exposure in the trading book that would be subject to deduction in accordance with GENPRU 2.2. (Capital resources) or to a 1250% risk weight in accordance with BIPRU 9 (Securitisation) is subject to a capital charge that is no less than that set out under those provisions, capped at the maximum possible default-risk-related loss. Unrated liquidity facilities are subject to a capital charge that is no less than that set out in BIPRU 9.
(1) 3Where a firm holds a position in the correlation trading portfolio, it must calculate:(a) The total specific risk capital charges that would apply just to the net long positions of the correlation trading portfolio; and(b) The total specific risk capital charges that would apply just to the net short positions of the correlation trading portfolio.(2) The higher of (1)(a) and (1)(b) will be the specific risk capital charge for the correlation trading portfolio.(3) In calculating
LR 10.2.4RRP
(1) Any agreement or arrangement with a party (other than a wholly owned subsidiary undertaking of the listed company):(a) under which a listed company agrees to discharge any liabilities for costs, expenses, commissions or losses incurred by or on behalf of that party, whether or not on a contingent basis;(b) which is exceptional; and(c) under which the maximum liability is either unlimited, or is equal to or exceeds an amount equal to 25% of the average of the listed company's
LR 10.2.6BGRP
(1) 3The following arrangements will meet the definition of break fee arrangements in LR 10.2.6A R (although this list is not intended to be exhaustive): ‘no shop’ and ‘go shop’ type provisions, which require payment of a sum to a party in the event the seller finds an alternative purchaser; a requirement to pay another party’s wasted costs in the event a transaction fails; non refundable deposits.(2) In contrast, payments in the nature of damages (whether liquidated or unliquidated)
LR 10.2.8RRP
If:(1) a major subsidiary undertaking of a listed company issues equity shares for cash or in exchange for other securities or to reduce indebtedness;(2) the issue would dilute the listed company's percentage interest in the major subsidiary undertaking; and(3) the economic effect of the dilution is equivalent to a disposal of 25% or more of the aggregate of the gross assets or profits (after the deduction of all charges except taxation) of the group;the issue is to be treated
MCOB 12.4.6GRP
(1) 4For some firms, their executive staff will be the executive board members.(2) Executive staff costs relating to company strategy, including payment shortfall strategy, should not be included as costs relating to the day-to-day management of customers in payment shortfall.(3) General financial reporting costs, including all legal and regulatory reporting costs, should not be included as costs relating solely to the analysis and management of accounts in payment shortfall.
MCOB 12.4.7GRP
4In calculating the cost of the additional administration required as a result of a customer having a payment shortfall, the firm:(1) may, where appropriate, take into account the following types of costs:(a) providing information or documents;(b) non-executive staff costs;(c) premises costs;(d) human resources costs; and(e) information technology costs;(2) should consider the extent to which the cost of the additional administration is shared with the rest of its business; and(3)
(1) The following enable the FCA to charge fees to cover its costs and expenses in carrying out its functions:13(a) paragraph 23 of Schedule 1ZA of the Act;13(b) regulation 92 of the Payment Services Regulations;13(c) regulation 59 of the Electronic Money Regulations;13(d) article 25(a) of the MCD Order;1513(e) regulation 21 of the Small and Medium Sized Businesses (Credit Information) Regulations. 13(f) regulation 18 of the Small and Medium Sized Business (Finance Platforms)
The key components of the FCA12fee mechanism (excluding the FSCS5levy, the FOS5 levy and case fees, and the CFEB levy5which are dealt with in FEES 5,5FEES 6 and FEES 7)5 are:555(1) a funding requirement derived from:(a) the FCA’s12financial management and reporting framework;(b) the FCA’s12budget; and(c) adjustments for audited variances between budgeted and actual expenditure in the previous accounting year, and reserves movements (in accordance with the FCA’s12reserves policy);(2)
LR 6.3.2GRP
(1) 1The purpose of LR 6.2.1R(2), LR 6.2.3R, and LR 6.3.1R is to ensure that the applicant has representative financial information throughout the period required by LR 6.2.1R(1) and LR 6.2.3R and to assist prospective investors to make a reasonable assessment of what the future prospects of the applicant’s business might be. Investors are then able to consider the applicant’s historical financial information in light of its particular competitive advantages, the outlook for the
COBS 20.3.6RRP
Table: Issues to be covered in PPFMSubjectIssues(1)Amount payable under a with-profits policy(a)Methods used to guide determination of the amount that is appropriate to pay individual with-profits policyholders, including:(i)the aims of the methods and approximations used;(ii)how the current methods, including any relevant historical assumptions used and any systems maintained to deliver results of particular methods, are documented; and(iii)the procedures for changing the current
COBS 20.3.8GRP
Table: Guidance on with-profits principles and practicesReference to PPFM issues (COBS 20.3.6R)With-profits principlesWith-profits practices(1) Amount payable under a with-profits policyGeneral(a) Circumstances under which any historical assumptions or parameters, relevant to methods used to determine the amount payable, may be changed;General(e) For each major class of with-profits policy, methods establishing the main assumptions or parameters that decide the output of methods
3To the extent that a firm4 has provided the information required by FEES 4.4.7 D to the FCA as part of its compliance with another provision of the Handbook, it is deemed to have complied with the provisions of that direction.444
COBS 11.2.7RRP
Where a firm executes an order on behalf of a retail client, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the ord
COBS 11.2.8GRP
For the purposes of ensuring that a firm obtains the best possible result for the client when executing a retail client order in the absence of specific client instructions, the firm should take into consideration all factors that will allow it to deliver the best possible result in terms of the total consideration, representing the price of the financial instrument and the costs related to execution. Speed, likelihood of execution and settlement, the size and nature of the order,
(1) A firm must calculate the charges referred to in BIPRU 7.4.25R as follows.(2) Step 1: offset long and short positions maturing:(a) on the same day; or(b) (in the case of positions arising under contracts traded in markets with daily delivery dates) within 10 business days of each other.(3) Step 2: allocate the positions remaining after step 1 to the appropriate maturity band in the table in BIPRU 7.4.28R (physical commoditypositions are allocated to band 1).(4) Step 3: match
A firm using the commodity extended maturity ladder approach must calculate its commodity PRR by:(1) following the same steps as in BIPRU 7.4.26R but using the rates from the table in BIPRU 7.4.33R rather than those in BIPRU 7.4.26R; and(2) summing all spread charges, carry charges and outright charge that result.
COBS 20.2.23RRP
A firm must only charge costs to a with-profits fund1 which have been, or will be, incurred in operating the with-profits fund. This may include a fair proportion of overheads.1
COBS 20.2.52GRP
(1) Reattribution and insurance business transfer costs (excluding policyholder advocate costs) should be met from shareholder funds. A firm may present alternative arrangements if it can show good reasons for doing so.(2) Shareholders should pay a reasonable proportion of the policyholder advocate's costs.(3) If a reattribution proposal is not successful, the FCA would expect the costs of the policyholder advocate to be met by the person initiating the proposal. That will usually
SUP 18.2.36GRP
The independent expert's opinion of the likely effects of the scheme on policyholders should:(1) include a comparison of the likely effects if it is or is not implemented;(2) state whether he considered alternative arrangements and, if so, what;(3) where different groups of policyholders are likely to be affected differently by the scheme, include comment on those differences he considers may be material to the policyholders; and(4) include his views on:(a) the effect of the scheme
SUP 18.2.39GRP
For a scheme involving long-term insurance business, the report should:(1) describe the effect of the scheme on the nature and value of any rights of policyholders to participate in profits;(2) if any such rights will be diluted by the scheme, how any compensation offered to policyholders as a group (such as the injection of funds, allocation of shares, or cash payments) compares with the value of that dilution, and whether the extent and method of its proposed division is equitable