This article has been written for financial services firms who are likely to have to apply for Full Authorisation rather than non-financial services firms who are likely to have to apply for a Limited Permission. If you are not a financial services firm and would like assistance from ATEB please click here.
The FCA has issued two consultation papers; CP13/10 the ‘Detailed Proposals for the FCA Regime’ here and more recently CP13/14 ‘Regulatory Fees and Levies’ here. These documents are lengthy; however, there will be specific sections that are, and are not relevant to your firm. The FCA is very keen to receive feedback from these consultation papers and we would strongly advise those affected by the changes to give feedback before 03 December for CP13/10 and 06 January for CP13/14.
CP13/10 details the proposals for the FCA regime which for most financial services firms will be little changed to what they are used to. They will have a risk based approach to supervision with a ‘lighter touch’ for low risk firms. They will be focusing on payday loans, advertising and affordability assessments.
CP13/14 is likely to be more emotive for smaller financial services firms. This paper details the proposals for initial application fees and the framework for periodic fees following the FCA taking over regulation. Note that these will be in addition to your interim permission fee.
For Full Authorisation the Application Fees are:
- Straightforward (e.g. credit broking) – £1,000
- Moderately complex (e.g. lower risk lending i.e. initial adviser charges paid over time) – £5,000
- Complex (e.g. debt advice & adjusting), example used was adding a CCA loan to a mortgage – £10,000
- Very Complex (providing credit references) – £15,000
Firms who are already authorised by the FCA – Variations of Permissions (VoPs):
- Additional ‘straightforward’ permissions – £250
- All other VoPs to increase scope of permissions – 50% of the relevant fee
So, what does this mean to a typical small IFA firm? We have assumed that you will be varying existing permissions rather than paying for full authorisation. You may note that a multi-national bank will be paying the same initial fees as a one man adviser (periodic fees are subsequently based on turnover).
A firm that advises on insurance products like buildings and contents, which the client will subsequently pay via monthly instalments (CCL category ‘C’) will need to pay £250 for a straightforward VoP.
A firm that allows its clients to pay for regular premium advice over a period of time i.e. more than 4 payments in a 12 month period (CCL category ‘A’) will need to apply for a moderately complex VoP which with the 50% reduction will be £2,500.
Finally a firm (and this was an example discussed by the FCA) that refinances an existing CCA loan onto a first charge mortgage (CCL ‘D’ & ‘E’) will need a complex VoP costing, after reduction, £5,000.
Chapter 2 of CP13/14 also details periodic fees i.e. those based on income generated from these specific permissions. The income could be minimal but the minimum annual fee is likely to be £500.