FSA proposes switch to measure fees on income

The FSA is proposing to change the way it calculates regulatory fees to replace the existing headcount of approved persons with an income measure from 2013/14.

The plans are outlined in the FSA's consultation paper CP11/21, published today, and affects fees for the FSA, the ombudsman service and the Money Advice Service from 2012/13.

The regulator is proposing to change the tariff base for fee-blocks A.10 (firms dealing as principal), A.12 (advisory arrangers, dealers or brokers), A.13 (advisory arrangers, dealers or brokers) and A.14 (corporate finance advisers).

The present tariff base for fee blocks A.12-14, where most advisers reside, is based on a headcount of approved persons registered under the CF30 customer function in the other fee-blocks.

Following an internal 'equality impact assessment' of its fees policy, the regulator said it felt the headcount measure made no allowance for part-time working, so might be interpreted as a barrier to recruiting part-time individuals or those in job-share roles.

It has instead proposed a 'regulated income' measure which it said would simplify the administration element and remove any "theoretical risk of adversely having an impact on good practice in equalities".

The FSA has already implemented a similar change regarding the way it calculates fees for the Financial Services Compensation Scheme (FSCS) levy.

How the FSA defines 'regulated income'

"We want firms to report the net amount of income from advisory and consultancy charges, brokerages, fees, commissions and related income arising out of the regulated activities prescribed for fee-blocks A.12, A.13 and A.14.

"The total should include any interest from income related to their regulated activities. Business expenses and administration charges should not be deducted or included.

Rebates to customers should be excluded and also fees or commission passed to other authorised firms since this might result in double-counting. The income subject to ombudsman service jurisdiction should coincide with our ‘regulated' income."