From 2013/14, the regulator is to assess firms’ contributions to its annual funding requirement based on income, rather than the current headcount-based methodology.
The changes were originally mooted last October and, following an impact assesment, will be confirmed at the FSA’s December board meeting.
In a consultation paper published yesterday, the FSA said the £100,000 threshold was “appropriate” as it would leave a similar proportion paying the minimum fee as under the current system.
At present, firms pay the minimum fee if they have fewer than two authorised persons.
Mortgage and general insurance intermediaries in fee blocks A.18 and A.19, whose fees are already based on income, have the same threshold.
For the A13 fee-block – made up of advisory arrangers, dealers or brokers not holding client money – the FSA estimates 46% of firms would fall under the £100k threshold and would therefore pay the minimum fee.
Under the current system, 43% pay the minimum.
Meanwhile, of the firms earning above the threshold, the FSA is estimating 72% will see their fees increase or decrease by more than £1,000, with 84% of this group experiencing a decrease.
Although it is yet to consult on the exact fees for the 2013/14 financial year, it has indicated firms in the A13 block would contribute between £5.90 – £7.25 for every £1,000 earned under the income-based system.
The FSA said: “Setting the minimum fee threshold at £100,000 preserves the overall proportion of firms paying minimum fees only and keeps most of the existing firms under the threshold.
“Some firms will undoubtedly see some sharp increases in fees but, while no doubt unwelcome, they should be affordable in relation to the income generated by the activity.”
The income-based system will come into effect at the same time as the FSA splits into the Financial Conduct Authority and Prudential Regulatory Authority, and yesterday’s paper also addressed how the fees and levies system will be adapted to the new regime.
