Related provisions for FEES 6.4.1
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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 (not including the FCA provider contribution classes)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.29[Note: the levy limits for the FCA provider contribution classes are set out in FEES 6 Annex 5R] 2
(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
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
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
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
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
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 any specific costs levy:(1) first, amongst the relevant classes in proportion to the amount of relevant costs arising from the different activities for which firms in those classes have permission up to the levy limit of each relevant class. The FCA provider contribution classes are not relevant classes for this purpose; and(2) thereafter, where the levy limit has been reached (whether as a result of compensation costs or specific costs or both) for a class
Since a firm that becomes a participant firm in the course of a financial year5 of the compensation scheme will already be obtaining a discount in relation to the base costs levy through the modified fee provisions of FEES 4.2.7ER7, no rule is necessary in FEES 69 for discounts on the base costs levy.119
(1) 22This rule deals with the calculation of:(a) a participant firm'sspecific costs levy in the financial year5 of the compensation scheme5 following the financial year of the compensation scheme5 in which it became a participant firm; or(b) a participant firm'sspecific costs levy in the financial year5 of the compensation scheme5 in which it had its permission extended, and the following financial year of the compensation scheme5; and(c) the tariff base for the classes3 that
12The FSCS must allocate any compensation costs levy:(1) first, to the relevant classes 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 class. The FCA provider contribution classes are not relevant classes for this purpose; and(2) thereafter, where the levy limit has been reached (whether as a result of
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
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 6.4.6AR(2)2):(1) to classes whose retail pool levy limit has not been reached as at the date of the levy;(2) in proportion to the relative sizes of the retail pool levy limits of the classes in (1) and up to those levy limits2; and(3) in accordance with the table in FEES 6 Annex 5R2.[Note: The retail pool levy limits for classes other
(1) An allocation in FEES 6.5A.1 R to an FCA provider contribution class other than the home finance providers and administrators' contribution class may not be of an amount that, if it were added to any levies2: (a) 2that correspond to the FCA’scompensation costs levies or specific costs levies; and (b) 2which have previously in the same financial year been imposed on the PRA funding class2 which corresponds to that FCAprovider contribution class (as set out in FEES 6.5A.7R),2the
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
(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)