FCA propose changes to consumer credit firm fees

The move, it says, would better reflect the costs associated with the authorisation and supervision of 51,000 firms throughout the UK, and is part of its “transformation” to a more “innovative and assertive” regulator.

As part of this, it has committed to investing £120m over the next three years in an effort to strengthen its ability to identify firms and individuals of concern.

The FCA is also proposing changes to the calculation of consumer credit fees to bring them more into line with other firm fees. The regulator has launched a consultation on the proposal, with an expectation of implementing the changes in time for the 2022/23 fee cycle.

At this stage, the regulator is proposing to limit this new model to firms in the free-block A.0, which is a single minimum fee firms pay, no matter how many A-blocks they fall into. In the fee-blocks which use income as a metric, the most common threshold is £100,000 of regulated income.

The proposed changes will account for 83% or £510.9m of its annual funding requirement (AFR) costs and cover major regulated activities. These include deposits taken by banks and building societies, insurance, fund management, retail investment, claims management, investment mortgage and general insurance intermediation.

The A fee-blocks would be liable to about £41.5m of the £50m generated by its model, compared to £21m currently raised by A.0. This would be equivalent to a minimum fee of £2,200 per firm.

Respondents have nine questions to answer and have until 31 January 2022 to respond.