The Financial Conduct Authority has proposed that larger advice firms should see a 4.9 per cent increase in fee payments to the regulator.
The funding requirement for fee-block A.13, which includes advice firms among others, has increased by 8.7 per cent, from £94.6mn to £102.8mn but the actual fee-rate that advisers will pay has increased by 4.9 per cent.
FT Adviser understands this is due to factors such as higher incomes being reported and the number of firms within the sector.
Although smaller adviser firms will only pay the minimum fee, the FCA has increased this to £1,750 after it was frozen at £1,500 last year.
The regulator said in its fee proposal document published today (April 9), that the costs of carrying out the advice guidance boundary review and of pensions dashboards will be confined to specific fee-blocks - which advisers are included in.
For example, as the advice guidance boundary reform will benefit insurers and asset managers, as well as financial advisers, the FCA has proposed to restrict cost recovery to six fee-blocks, of which one includes advisers.
The regulator’s overall AFR is estimated to go up by £73.2mn in 2024-25, an increase of 10.7 per cent from 681.8mn in 2023-24.
The AFR is made up of two parts: firstly the ongoing regulatory activities (Ora) budget which is the cost of operating the FCA plus the extension of “regulatory responsibility projects”.
Then there are exceptional projects – these recover the costs of additional work the FCA undertakes to implement government initiatives and legislation.
The Ora is projected to be £729.1mn this year, up from £664.4mn.
One reason costs could have increased overall is because the FCA now incurs costs for supervising implementation and adherence on the consumer duty which came into force last year.
The FCA said it would recover £5.3mn in costs for 2024-25 in relation to the consumer duty.
The FCA said the amount it collects under the AFR will be reduced by the penalty revenues retained from 2023-24.
“Before paying the revenues we receive to the exchequer, we can retain some of the enforcement costs incurred in generating them,” it said.
“We use these to reduce our fees the following year (other than for the fees levied on the penalty payers themselves).”
The penalty rebates are currently estimated at £35.4mn overall and £3mn for the adviser fee block A.13.
The FCA said: “Our latest estimate of the financial penalty rebate for 2024-25 is £35.4mn. This is 33 per cent less than last year’s total of £52.5mn and will be less than our enforcement costs. Some fines have been issued but have not yet been paid.”
The FCA said all these fees will be finalised in July, pending its consultation.
amy.austin@ft.com
