The Financial Conduct Authority (FCA) has set out its proposals for the fees it intends to charge in the 2014/15 financial year. The FCA’s fees can be divided into the following categories: application fee, periodic fee, levies to fund the Financial Ombudsman Service (FOS) and levies to fund the Money Advice Service (MAS).
Consumer credit firms applying for limited permission can expect to pay an application fee of £100 if their consumer credit income is £50,000 or less, and £500 otherwise.
The FCA usually classifies applications for authorisation into one of three categories – straightforward, moderately complex and complex. However, they are now proposing to introduce a new ‘very complex’ category specifically for credit reference agencies when applying for full permission. The FCA says it expects these firms will place “a higher demand on our resources”. Payday lenders, logbook lenders and home-collected credit agencies will fall into the complex category, while peer-to-peer lenders and other types of lender will be classed as moderately complex.
Straightforward applications will cost £1,000, moderately complex applications £5,000, complex applications £10,000 and very complex applications £15,000. A firm applying for both consumer credit authorisation and other FCA permissions will pay the higher of their two applicable fees – application fees for other firms can be up to £25,000. Firms already authorised by the FCA who need to add consumer credit permissions will pay half the usual consumer credit authorisation fee for their firm type.
In addition to a fee on application, firms also pay what is known as a ‘periodic fee’, which is paid annually. Firms are allocated to a particular ‘fee block’ based on the activities they undertake, and pay a periodic fee appropriate to that block.
There will only be two fee blocks for consumer credit firms – those with limited permission and those with full permission. The amount of the fee will be subject to a separate consultation in March 2014, but current estimates suggest that limited permission firms will pay £250 if their annual consumer credit income is £50,000 or less, £400 of it is more than £50,000 but not more than £100,000, and £500 if it is more than £100,000 but not more than £250,000. For full permission firms, the charges are estimated at £500, or £1,000 if income is more than £100,000 but not more than £250,000. Firms with an income of more than £250,000 will pay the fee for the £100,000 to £250,000 band plus 23p (limited permission) and 30p (full permission) for every £1,000 of income above £250,000.
Credit firms who only offer not for profit debt counselling will be exempt from application and periodic fees. Credit unions will have their application fees capped at £200.
Firms with limited permission will pay a flat fee, perhaps between £25 and £50, to fund the FOS. Those with full permission can expect to pay an as yet unspecified amount based on their annual consumer credit income. Not-for-profit bodies will be exempt from the FOS levy.
All FCA regulated firms also pay a levy to fund the MAS, an independent body which provides general information to allow consumers to manage their finances. The MAS levy will not be payable by firms holding limited permission, but once they hold full permission, they can expect to pay a fee. The consultation on this will take place in March 2014.
The paper stresses that funding from firms it regulates is the FCA’s only source of income.
Firms have until January 6 2014 to respond to the consultation paper, and, except where further consultations will take place; the final information on fees to be charged will be announced in February or March.