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AUTH 4.1 Introduction

Application

AUTH 4.1.1 R

1 3This chapter applies to:

  1. (1)

    every applicant for Part IV permission (including an incoming firm applying for top-up permission);

  2. (2)

    every Treaty firm that wishes to exercise a Treaty right to qualify for authorisation under Schedule 4 to the Act (Treaty rights) in respect of regulated activities for which it does not have an EEA right; and

  3. (3)

    an applicant for a certificate under article 54 of the Regulated Activities Order.2

AUTH 4.1.2 G

This chapter does not apply to:

  1. (1)

    an EEA firm that wishes to exercise an EEA right; or

  2. (2)

    an ICVC; or

  3. (3)

    a UCITS qualifier.

Purpose

AUTH 4.1.3 G

The purpose of this chapter is to set out the requirements on applicants for Part IV permission, and Treaty firms qualifying for authorisation under Schedule 4 to the Act (Treaty rights), to pay fees.

Background

AUTH 4.1.4 G

GEN 3 (FSA Fees - General Provisions) applies to fees required by this chapter.

AUTH 4.1.5 G

Most of the detail of what fees are payable by applicants and Treaty firms is set out in AUTH 4 Annex 1.6

AUTH 4.1.5A G

AUTH 4 Annex 2 R contains details of the application fees payable by applicants seeking to obtain permission to carry out any of the activities included in the A.2 (mortgage lenders and administrators), A.18 (mortgage lenders, advisers and arrangers) and A.19 (general insurance mediation) activity groups, for the period before these activities begin to be subject to regulation.54

AUTH 4.1.6 G

The rates set for authorisation fees represent an appropriate proportion of the costs of the FSA in processing the application or exercise of Treaty rights.

AUTH 4.1.7 G

Except as set out in AUTH 4.1.7A G, applications (and exercises of Treaty rights) are categorised by the FSA for the purpose of fee raising as complex, moderately complex and straightforward as identified in AUTH 4 Annex 1. This differentiation is based on the permitted activities sought and does not reflect the FSA's risk assessment of the applicant (or Treaty firm).4

AUTH 4.1.7A G

For the period before the activities referred to in AUTH 4.1.5A G are subject to regulation, applications for the A.2 (mortgage lenders and administrators), A.18 (mortgage lenders, advisers and arrangers) and A.19 (general insurance mediation) activity groups are categorised by the FSA for the purpose of fee raising using a measure of the amount of business being undertaken by the person, as detailed in AUTH 4 Annex 2 R.54

AUTH 4.1.8 G

A potential applicant (or Treaty firm) has the opportunity to discuss its proposed application (or exercise of Treaty rights) with the FSA before submitting it formally (see AUTH 3.9.1 G). If an applicant (or Treaty firm) does so, the FSA will be able to use that dialogue to make an initial assessment of the fee categorisation and therefore indicate the authorisation fee that should be paid.

AUTH 4.1.9 G

See AUTH 3.9 in relation to the procedures for making applications for Part IV permission and AUTH 5 for procedures for the exercise of Treaty rights by Treaty firms.

AUTH 4.1.10 G

Authorisation fees are not refundable.

AUTH 4.2 Obligation to Pay Authorisation FeesThe provisions regarding authorisation fees are set out in FEES 3 (Application, Notification and Vetting Fees)

General

AUTH 4.2.1 R

A person to whom this chapter applies must pay to the FSA an authorisation fee for each application made (or exercise of a Treaty right), as set out in AUTH 4 Annex 1 and AUTH 4 Annex 2 R. 1

Amount

AUTH 4.2.2 R

In respect of a particular application (or exercise) the authorisation fee referred to in AUTH 4.2.1 R is the highest of the tariffs set out in part 1 of AUTH 4 Annex 1 and part 2 of AUTH 4 Annex 2 R which apply to that application (or exercise).1

AUTH 4.2.3 G

If an application (or exercise of a Treaty right) falls within more than one category, only one fee is payable. That fee is the one for the category to which the highest fee tariff applies.

Due date and method of payment

AUTH 4.2.4 R

The sum payable under AUTH 4.2.2 R must be paid:

  1. (1)

    by bankers draft, cheque or other payable order;

  2. (2)

    in full without deduction; and

  3. (3)

    on or before the date on which the application is made (or notice of exercise is given).

AUTH 4.2.5 G

The appropriate authorisation fee is an integral part of an application for Part IV permission. Any application pack received by the FSA without the accompanying appropriate authorisation fee, in full and without deduction (see AUTH 4.2.4 R), will not be treated as an application made, incomplete or otherwise, in accordance with section 51(3)(a) of the Act. Where this is the case, the FSA will contact the applicant to point out that the application cannot be progressed until the appropriate fee has been received. In the event that the appropriate authorisation fee, in full and without deduction, is not forthcoming, the application pack will be returned to the applicant and no application will have been made.2

Modification for certain Treaty firms

AUTH 4.2.6 R

If a certificate has been issued under paragraph 3(4) of schedule 4 to the Act in respect of an exercise of a Treaty right, no sum payable under AUTH 4.2.2 R.

AUTH 4.2.7 R

If no certificate has been issued under paragraph 3(4) of schedule 4 to the Act in respect of an exercise of a Treaty right, the sum payable is as specified in Part 4 of AUTH 4 Annex 1.

AUTH 4.3 Obligation to pay certification fees

General

AUTH 4.3.1 R

1An applicant for a certificate under article 54 of the Regulated Activities Order must pay to the FSA the application fee specified in Part 6 of AUTH 4 Annex 1.

Due date and method of payment

AUTH 4.3.2 R

1The application fee must be paid:

  1. (1)

    by bankers draft, cheque or other payable order;

  2. (2)

    in full without deduction; and

  3. (3)

    on or before the date on which the application is made.

AUTH 4.3.3 G

1An application for an article 54 certificate will be treated as incomplete until the application fee has been paid.

AUTH 4 Annex 1 Authorisation fees payable

R

Application type (see Part 2)

Amount payable

(a) Credit unions - registration of common bond

£200

(b) Version 1 credit unions - authorisation

£300

(c) Version 2 credit unions - authorisation

£1,800

(d) Straightforward

£1,500

(e) Moderately complex

£5,000

(f) Complex

£25,000

Straightforward cases

Activity grouping

Description

A.3

Friendly societies only

A.4

Friendly societies only

A.12

Advisory arrangers, dealers or brokers (holding or controlling client money and/or assets)

A.13

Advisory only firms and advisory arrangers, dealers or brokers (not holding or controlling client money and/or assets)

A.14

Corporate finance advisers

A.1810

Mortgage lenders, advisers and arrangers (excluding mortgage lenders)10

A.1910

General insurance mediation10

Moderately complex cases

Activity grouping

Description

A.1

E-money issuers only

A.210

Mortgage lenders and administrators10

A.5

Managing agents at Lloyd's

A.7

Fund managers

A.9

Operators, trustees and depositaries of collective investment schemes

A.10

Firms dealing as principal

B.

Service companies

Complex cases

Activity grouping

Description

A.1

Deposit acceptors (excluding e-money issuers and credit unions)

A.3

Insurers - general (excluding friendly societies)

A.4

Insurers - life (excluding friendly societies)987653421

The fee payable under SUP 6.3.22 R is 50% of that payable under AUTH 4.2.2 R.There are no circumstances specified for the purposes of SUP 6.3.22 R (2).

If the Treaty firm wishes to undertake the permitted activities in question through its branch in the United Kingdom, the fee is 50% of the fee that would be payable under AUTH 4.2.2 R.

If the Treaty firm wishes to undertake the permitted activities in question by providing services in the United Kingdom, the fee is 25% of the fee which would be payable under AUTH 4.2.2 R.

The activity group definitions are set out in SUP 20 Annex 1.

The amount payable in relation to each application is £2,000.

AUTH 4 Annex 2 Authorisation fees payable in relation to the A.2 and A.18 activity groups up to and including 30 October 2004 and the A.19 activity group up to and including 13 January 2005

G

Note: This annex specifies the application fees for applicants seeking to apply for Part IV permission, or to vary their existing Part IV permission, in order to undertake any of the activities specified in the A.2, A.18 and A.19 activity groups (see Part 1 of SUP 20 Annex 1 for details of the activities).3

For the permitted activities included in the A.2 and A.18 activity groups, regulation commences on 31 October 2004. Regulation commences on 14 January 2005 for the permitted activities included in the A.19 activity group.

The fee rules set out in this annex will apply from the beginning of the application period until regulation of these permitted activities commences. At that time, these rules will cease to have effect and application fees for these types of permitted activities will be dealt with alongside the other authorisation fees as part of AUTH 4 Annex 1.

1. For the A.2 and A.18 activity groups, these rates apply up to and including 30 October 2004.

2. For the A.19 activity group, these rates apply up to and including 13 January 2005.

Activity group

Amount payable

Fee bands

Fee - early applications

Fee - other applications

Discount - electronic applications

Discount - non-electronic applications paying by direct debit

Band no.

Band

A.2 Mortgage lenders and administrators

1

2

3

4

Gross advances (£m)

0-10

>10-100

>100-1,000

>1,000

Fee (?)

600

8,000

13,000

23,000

Fee (?)

1,200

10,000

15,000

25,000

Discount (£)

100

250

250

500

Discount (£)

50

50

50

50

A.18 Mortgage lenders, advisers and arrangers; and

A.19 General insurance mediation

5

6

7

8

Annual income (£m)

0 - 1

>1-3

>3-25

>25

Fee (?)

600

4,250

9,000

23,000

Fee (?)

1,200

5,750

11,000

25,000

Discount (£)

100

250

250

500

Discount (£)

50

50

50

50

(1)

An early application is an application lodged:

(a)

for A.2 or A.18 applications, before 1 April 2004; and

(b)

for A.19 applications, before 1 June 2004.

(2)

For the purposes of this table:

(a)

An electronic application is one submitted via the electronic facility provided by the FSA for these purposes.

(b)

Gross advances means the value of all new mortgage advances made (not the total mortgage balances outstanding) including loans for house purchase, remortgages, further advances and top-up loans, in the 12 months to 31 December 2003; PLUS

the value of all new mortgages administered (not the total mortgage balances outstanding) including loans for house purchase, remortgages, further advances and top-up loans, in the 12 months to 31 December 2003, multiplied by 0.5.

Note: For this purpose, a mortgage is a contract for a loan secured by a first charge over residential property in the United Kingdom.

(3)

For the purposes of this table, annual income means:

(a)

the net amount retained by the firm of all brokerages, fees, commissions and other related income (e.g. administration charges, overriders, profit shares) due to the firm in respect of or in relation to:

(i)

activities which would be mortgage mediation activity if they had been carried out after 30 October 2004; PLUS

(ii)

activities which would be insurance mediation activity (in relation to general insurance contracts or pure protection contracts) if they had been carried out after 13 January 2005;

earned in its latest financial year ending on or before 31 December 2003;

PLUS

(b)

(i)

in relation to the activities set out in (a)(i), for any mortgage mediation activity carried out by the firm for which it receives payment from the lender on a basis other than that in (a), the value of all new mortgage advances resulting from that activity multiplied by 0.004;

PLUS

(ii)

If the firm is a mortgage lender, the value of all new mortgage advances which would be regulated mortgage contracts if they had been made after 30 October 2004 (other than those made as a result of mortgage mediation activity by another firm), multiplied by 0.004;

for its latest financial year ending on or before 31 December 2003;

PLUS

(c)

in relation to the activities set out in (a)(ii):

(i)

for any insurance mediation activity carried out by the firm for which it receives payment from the insurer on a basis other than that in (a), the amount of premiums receivable on the contracts of insurance resulting from that activity multiplied by 0.07; PLUS

(ii)

if the firm is an insurer, the amount of premiums receivable on its contracts of insurance multiplied by 0.07, excluding those contracts of insurance which:

(aa)

result from insurance mediation activity by another firm, where a payment has been made by the insurer to the firm under (a); or

(ab)

the insurer reports, and pays a fee on, in the A.4 activity group; or

(ac)

are not general insurance contracts or pure protection contracts;

for its latest financial year ending on or before 31 December 2003.

The firm must include in its income calculation, on the same basis as above, earnings from those who will become its appointed representatives immediately after authorisation.

In note (3), a reference to a "firm" also includes reference to any person who carried out activities which would be;

(1)

mortgage mediation activity if they had been carried out after 30 October 2004; or

(2)

insurance mediation activity (in respect of general insurance contracts or pure protection contracts) if they had been carried out after 13 January 2005. 2

3.

The activity group definitions are set out in SUP 20 Annex 1.1