The Financial Conduct Authority has proposed a £5,000 application fee as an appropriate contribution towards the costs of processing applications to add new financial promotions products.
In a consultation paper, Regulatory fees and levies: policy proposals for 2023/24, published today (November 29), the regulator said this fee will not be treated as a 'variation of permission' so the full charge will be payable whether or not the applicant is already authorised by the FCA.
Applicants will be charged separately for each new application, without taking account of the number of product types within a single application.
Where an applicant also applies for a Part 4A permission, the FCA said its usual rule will apply and they will pay only one fee – the highest.
“A firm which already has a permission under section 55NA and subsequently applies to extend its scope, for example to promote additional financial products, will be charged 5 per cent,” it said.
“If it applies instead to reduce the scope of its permission, there will be no charge.”
Subject to parliamentary approval, the financial services and markets bill will amend FSMA to impose a requirement on all authorised firms, preventing them from undertaking financial promotions on behalf of unauthorised businesses.
Firms will have to apply to the FCA for permission approve financial promotions of types of products.
The FCA said: “We are recovering £2.4mn project costs in 2022/23, spread across the full population of fee-payers. We expect to consult shortly on the proposed regulatory regime.
“We do not anticipate material ongoing supervisory costs affecting periodic fees, so these will be absorbed within existing resources.”
The consultation paper sets out the FCA's proposed policy changes to the way it will raise FCA fees from 2023/24.
Application fees are charged when firms apply to be authorised or registered by FCA.
Until January 2022, when the regulator introduced a new pricing structure, most FCA application fees had not changed since they were set by its predecessor, the Financial Services Authority (FSA), more than 20 years ago.
“Consequently, their value had been eroded by inflation,” it said. “To prevent the charges falling behind in the future, we said we would increase them annually in line with inflation.”
The City watchdog said application fees do not recover the full cost of the regulatory gateway.
“In 2021/22, the cost of our authorisations division was £33.9mn. This excludes associated costs such as legal advice and systems.
“The revenue from application fees in 2021/22 was £6.8mn, or about 20 per cent of the cost our authorisations division incurred.”
For 2022/23, the FCA expects the revenue to be about £9mn under the new pricing structure.
The balance of the cost incurred is recovered through annual fees paid by existing fee-payers.
“Since all firms benefit from effective policing of the perimeter, it is reasonable for the market to share the costs of the gateway,” it said.
Fee rates assumptions
FSMA allows the FCA to recover expenses incurred which means its funding requirement (AFR) is determined by the budget.
