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Compliance

FCA application fees restructuring

Posted on 17 Jan 2022

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FCA set to increase application authorisation charges with latest fees restructuring

On 10 January 2022, the Financial Conduct authority issued a policy statement setting out in detail the new fee structure for authorisation application fees set to take effect from 24 January 2022. This release follows a consultation paper in November 2020 and the regulators response to feedback on the proposed changes in April last year.

Under this amendment, application fees have been restructuring into 10 pricing bands, improving both the transparency and simplicity of application fees - which currently exceeds 80 separate charges. These new pricing bands range from £250 for straightforward applications to £200,000 for the operation of a UK recognised investment exchange. See below for the complete fee categories:

Category Fee (£)
1 250
2 500
3 1,000
4 2,500
5 5,000
6 10,000
7 25,000
8 50,000
9 100,000
10 200,000

The FCA has introduced these changes to account for the erosion in the value of fees due to inflation, which has resulted in the period fees paid by authorised firms to account disproportionately for the processing costs of new applications. The current fees for applications, many of which were first introduced over 20 years ago, have been revalorised consistent with inflation from their latest revision, and then rounded up or down to the new fee categories. The revalorisation of fees on an annual basis by the FCA will be adopted to mitigate the any further deficits in the future.

Although the majority have seen an increase as a result of this revalorisation, 23 have seen no change and 11 few have been reduced. The FCA estimate the overall impact of this change “would raise the contribution of applicants towards the cost of processing applications from about a third to about two-thirds”.

Applications for part 4a permissions of advisors, arrangers, dealers or brokers; corporate finance advisors; insurers; and firms holding client money or assets will see an increase from £1500 to £2500 (category 4). Furthermore, the previous charge for a Variation of permissions (VoP) within the same fee block will see a charge incurred at a flat rate of £500 (category 2), up from £250.

Notably, due to the unreliability of the revenue estimates provided by applicant firms yet to begin trading, the fees for both consumer credit applications and claims management companies, which have each historically factored in the applicant’s projected income, have been shifted to flat-rate fees based on permissions.

The structure of fees for validation orders has also seen noteworthy change – the charges of which have been split across fee categorises 3 (£1000) to 7 (£25,000) depending on the value of the agreement within each VO.

Finally, the proposed new charge of £250 for long Form A applications for senior management functions and controlled functions for appointed representatives will be omitted from the update on the 24th, but is promised to come into effect in due course. The proposal to introduce a fee of £500 for changes in control remains deferred.

Applications currently in progress will not be exempt from these changes if not submitted prior to the changes taking effect on 24 January.


Laven and FCA Applications


At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant with new regulations and aware of all the risks outlined in this report. Whether this is through assisting with new policies and procedures that need to be put in place or providing online/in-person training for staff to make them fully aware of the regulatory obligations.

Laven has also built Laven Tech, a unique Regulatory Technology (RegTech) solution that leverages advanced technology combined with our vast subject matter expertise. Our RegTech solution is designed to assist fund managers, service providers and investors to meet today’s growing demands.

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