FCA adviser levy confirmed at £73.7m

Regulator will pass on savings

clock
FCA adviser levy confirmed at £73.7m

The Financial Conduct Authority (FCA) has confirmed it will collect £73.7m from advisers for the coming year, representing a 1.6% reduction on the previous year.

The regulator said it has made efficiency savings of £7.6m, which it will pass on to the industry. Last year advisers paid £74.9m.

The reduction in fees reflects savings achieved at the FCA and across the regulatory bodies on behalf of which the FCA levies fees: the Money Advice Service (MAS), the Financial Ombudsman Service (FOS), and Pension Wise.

The regulator said its underlying annual funding requirement for the year 2016-17 is £481.6m, unchanged from the current year. This excludes consumer credit cost, the new area of supervision the regulator has taken on.

Taking into consideration the cost of consumer credit activities, the FCA's budget will increase 7.8% compared to the current year, to £519.3m. Of this, a rebate of £48.7m from financial penalties will be deducted before £470.6m will be levied on the industry, including a new consumer credit fee block.

The minimum fees, which firms falling below certain thresholds pay, remain unchanged.

FOS

As part of the overall levy on firms the regulator will collect £24.5m on behalf of the FOS, to which advisers will contribute 2%, about £500,000.

This is 5% more than the £23.3m it levied last year, however, it effectively represents a freezing of last year's levy and an additional £1.2m for the transition of consumer credit.

Reduction in MAS levy

The FCA reduced the amount it will collect from the industry to cover the cost of running the MAS after collecting more money from consumer credit firms than it had initially expected.

Instead of raising £27.6m for the running of the MAS' money guidance arm, it will now collect £25.7m.

Advisers will contribute £2.9m to the MAS - about a third less than last year, when they paid £4.2m - and 6.9% less than estimated in April.

The government announced in March they planned to transform the MAS and its pension guidance equivalent The Pension Advisory Service, effectively scrapping the bodies and opening new, smaller organisations in their place.

In response, MAS stopped all marketing and brand-building activity as well as the development of its website with immediate effect, freeing up £5m as a result.

The funds will be put towards the cost of transforming the MAS as well as to fund initiatives delivered through voluntary partners.

However, MAS will still be giving money guidance to people until at least 2018, the FCA said, meaning it will continue to collect the levy in the coming two years.

It will consult about the allocation method for the new money guidance body - also funded by the industry - in due course, it said.

Pension Wise

Funding for the government's free at-retirement guidance service Pension Wise will also fall to £22.6m, representing a 42% decrease from the £39.1m 2015/16 funding requirement. This follows a £7.3m underspend in the current year.

Advisers will contribute about £2.7m, or 12% of the running costs of the service, reflecting their smaller potential benefits from the service compared with the four other contributing fee blocks, which include portfolio managers and life insurers.

 

More on Group Protection

Blue Monday: Wellbeing opportunities for employers

Blue Monday: Wellbeing opportunities for employers

Advice from industry experts

John Brazier
clock 17 January 2022 • 4 min read
COVER Wellbeing 360 Summit now open for registration

COVER Wellbeing 360 Summit now open for registration

Virtual conference on 24 March

COVER
clock 13 January 2022 • 2 min read
Gen Z placing a priority on ethical employers

Gen Z placing a priority on ethical employers

ESG commitments a priority for younger workers

John Brazier
clock 13 January 2022 • 2 min read

Highlights

The Rising Stars of Protection: Lauren Hygate

The Rising Stars of Protection: Lauren Hygate

“It all comes back to those real life stories that get shared”

John Brazier
clock 06 January 2022 • 7 min read
Blue Monday and beyond: The whole wellbeing proposition

Blue Monday and beyond: The whole wellbeing proposition

Latest COVER webinar

COVER
clock 04 January 2022 • 1 min read
The Top 20 Stories on COVER in 2021

The Top 20 Stories on COVER in 2021

The most-read news stories of last year

John Brazier
clock 04 January 2022 • 6 min read