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FCA freezes small firm fees and gives two-month extension

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  • 07/04/2020
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FCA freezes small firm fees and gives two-month extension
The Financial Conduct Authority (FCA) is proposing to hold fees for firms that only pay minimum fees for the 2020/21 year.

 

It is also offering a two-month extension for medium and smaller firms to pay those fees, giving them a full 90 days to make the payment.

The moves come as part of its package to support small and medium firms in relation to the Covid-19 crisis, which Mortgage Solutions revealed last week.

Brokers said that one of the biggest concerns was maintaining fee payments during the outbreak and the regulator has recognised that in its CP20/6: Regulated fees and levies: rates proposals 2020/21 paper.

Overall, the FCA will see its annual funding requirement (AFR) increase by 5.2 per cent in 2020/21 to £587.6m, the regulator announced.

FCA solo-regulated firms in the A.0 minimum fee block will once again pay £1,151 for 2020/21 and be given until the end of the year to do so.

Brokers in the A.18 Home finance providers, advisers and arrangers block will see their individual firm fee rates by 1.5 per cent.

 

Small and medium firms

“Given the impact of Covid-19, we have aimed to ensure that we protect the smallest firms by proposing a freezing of minimum fees,” the regulator said.

“This means that the 71 per cent of firms that are small enough to only pay minimum fees will see no change in the fees they pay.

“To help medium and smaller firms we are proposing to extend the period for paying their fees by two months to 90 days.

“This means that 89 per cent of firms will have until the end of 2020 to pay their fees and levies. Larger firms will be expected to pay their fees under the usual payment terms,” it added.

Medium and smaller firms are being identified as those that pay total fees and levies in 2020/21 of less than £10,000.

This includes all fees and levies paid to the FCA, Prudential Regulation Authority (PRA), the Financial Services Compensation Scheme, the Financial Ombudsman Service, Money and Pensions Service, Devolved Authorities, the Payment Systems Regulator, the Financial Reporting Council and under the illegal money lending levy.

 

Recognise challenges for firms

“The board has carefully considered our approach to fees for the year ahead,” said FCA chairman Charles Randell.

“The coronavirus has added to the challenges already facing the FCA and it is more important than ever that we can deliver our objectives this year.

“But we also recognise the challenges facing financial services firms, so we are taking action to ensure to protect smaller and medium sized firms from the burden of regulatory fees.

“To ensure we continue to deliver on our priorities and meet our objectives, our overall annual funding requirement (AFR) will increase by 5.2 per cent in 2020/21 to £587.6m,” he added.

 

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