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2005-01-01
2005-01-14
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2005-04-21

COMP 13.1 Application and Purpose

Application

COMP 13.1.1 R 01/01/2004

This chapter applies to:

(1)
every participant firm;
(2)
the FSCS; and
(3)
the Society.

COMP 13.1.2 G 01/01/2004

Firms which are not participant firms (such as certain types of incoming EEA firms, service companies and ICVCs) are not required to contribute towards the funding of the compensation scheme.

COMP 13.1.2A G 01/12/2004

Although a member is a participant firm for the purposes of most provisions of COMP, a member is excluded from the definition of participant firm for the purposes of COMP 13 (see definition of participant firm in Glossary). This is because the fees levied in relation to the carrying on of insurance market activities by members will be imposed on Society rather than individually on each member (see COMP 13.4.21 R).

Purpose

COMP 13.1.3 G 01/12/2001

The purpose of this chapter is to set out the requirements on participant firms to pay levies imposed by the FSCS to provide funding for its functions.

COMP 13.2 General structure

COMP 13.2.1 G 01/12/2001

Section 213(3)(b) of the Act requires the FSA to make rules to enable the FSCS to impose levies on authorised persons in order to meet its expenses. These expenses include in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks.

COMP 13.2.2 G 01/12/2001

The FSCS may impose two types of levy: a management expenses levy, and a compensation costs levy. In the first three full years of the operation of the compensation scheme, the FSCS may impose an establishment costs levy as part of a management expenses levy. The FSCS has discretion as to the timing of the levies imposed.

COMP 13.2.3 G 01/12/2001

In calculating a compensation costs levy, the FSCS may include anticipated compensation costs for defaults expected to be determined in the 12-month period following the date of the levy. The total of all management expenses levies attributable to a financial year will be restricted to the amount set out on an annual basis in COMP 13 Ann 1 R.

COMP 13.2.4 G 01/12/2001

In order to allocate a share of the amount to be funded by an individual participant firm, the funding arrangements are split into three sub-schemes: the accepting deposits sub-scheme, the insurance business sub-scheme, and the designated investment business sub-scheme. The business carried on by a participant firm determines into which sub-scheme, or sub-schemes, it falls.

COMP 13.2.5 G 01/12/2001

Within each sub-scheme there are one or more contribution groups. These relate to different types of activity carried on by participant firms within each sub-scheme. Within a sub-scheme, individual participant firms are allocated for funding purposes to one or more contribution groups, depending on their business activities. This meets a requirement of section 213(5) of the Act that the FSA, in making rules to enable the FSCS to impose levies, must take account of the desirability of ensuring that the amount of the levies imposed on a particular class of authorised person reflects, so far as practicable, the amount of claims made, or likely to be made, in respect of that class of person.

The management expenses levy

COMP 13.2.6 G 01/12/2001

Section 223 of the Act (Management expenses) prevents the FSCS from recovering, through a levy, any management expenses attributable to a particular period in excess of the limit set in COMP as applicable to that period. 'Management expenses' are defined in section 223(3) to mean expenses incurred or expected to be incurred by the FSCS in connection with its functions under the Act, except:

(1)
expenses incurred in paying compensation; and
(2)
expenses incurred as a result of the FSCS making the arrangements to secure continuity of insurance set out in COMP 3.3.1 R and COMP 3.3.2 R or taking the measures set out in COMP 3.3.3 R and COMP 3.3.4 R when a relevant person is an insurer in financial difficulties.

COMP 13.2.7 G 01/12/2001

A management expenses levy under COMP may consist of three elements. The first is a base costs levy, for the base costs of running the compensation scheme in a financial year, that is, costs which are not dependent upon the level of activity of the compensation scheme and which therefore are not referable to any specific default. Included in this category are items such as the salary of the members of the board of the FSCS, the costs of the premises which the FSCS occupies, and its audit fees. The amount that each participant firm pays towards a base costs levy is calculated by reference to the regulatory costs paid by the firm. All participant firms are liable to contribute towards a base costs levy.

COMP 13.2.8 G 01/12/2001

The second element of a management expenses levy is a specific costs levy for the "specific costs" of running the compensation scheme in a financial year. These costs depend on the number of claims and types of default, and include the salaries of the staff of the FSCS and legal and other professional fees paid in respect of particular defaults. The specific costs are allocated to the contribution group or groups of which the relevant person in default was a member, or which is responsible for those costs under COMP, on the basis of the protected claims against that person. The FSCS may include in a specific costs levy the specific costs that the FSCS expects to incur (including in respect of defaults not yet declared at the date of the levy) during the financial year of the compensation scheme to which the levy relates. The amount that each participant firm pays towards the specific costs levy is calculated by reference to the amount of business conducted by the firm in each of the contribution groups to which the FSCS has allocated specific costs. Each contribution group has a separate "tariff base" for this purpose, set out in COMP 13.6.7 R. Participant firms may be exempt from contributing to the specific costs levy.

COMP 13.2.9 G 01/12/2001

The third element of a management expenses levy is the costs of establishing the FSCS. The FSCS may impose an establishment costs levy only until the end of the third full financial year of operation of the compensation scheme. The amount that each participant firm pays towards the establishment costs levy is calculated on the same basis as the base costs levy, and all participant firms are liable to contribute.

COMP 13.2.10 G 01/12/2001

The FSA intends to consult in January each year on the amount which it will set as the limit on the management expenses attributable to the forthcoming financial year of the FSCS.

The compensation costs levy

COMP 13.2.11 G 01/12/2001

The compensation costs levy is made up of the compensation costs which the FSCS has incurred and has not yet recovered from participant firms (less any recoveries it has made using the rights that have been assigned to it), together with those compensation costs it expects to incur (including in respect of defaults yet to be declared) over the 12 months following the date of the levy.

COMP 13.2.12 G 01/12/2003

Compensation costs are principally the costs incurred in paying compensation. Costs incurred in securing continuity of long-term insurance in safeguarding eligible claimants when insurers are in financial difficulties, and in making payments or giving indemnities under COMP 11.2.3 R are also treated as compensation costs. For funding purposes, these costs are allocated by the FSCS, and met by participant firms, in the same way as specific costs: see COMP 13.6.6 R.

COMP 13.2.13 G 01/12/2001

If a participant firm is a member of more than one contribution group, the total compensation costs levy and specific costs levy for that firm will be the aggregate of the individual levies calculated for the firm in respect of each of the contribution groups.

Incoming EEA firms

COMP 13.2.14 G 01/12/2001

Incoming EEA firms which obtain cover or 'top up' under the provisions of COMP 14 are firms whose Home State scheme provides no or limited compensation cover in the event that they are determined to be in default. Under COMP 13.7, the FSCS is required to consider whether incoming EEA firms should receive a discount on the amount that they would otherwise pay as their share of the levy, to take account of the availability of their Home State cover. The amount of any discount is recoverable from the other members of the incoming EEA firm's contribution group.2

COMP 13.3 Exemption

COMP 13.3.1 R 01/02/2004

(1)
A participant firm which does not conduct business that could give rise to a protected claim by an eligible claimant and has no reasonable likelihood of doing so is exempt from a specific costs levy, or a compensation costs levy, or both, provided that:
1. (a)
  it has notified the FSCS in writing that those conditions apply; and
2. (b)
  the conditions in fact continue to apply.
(2)
The exemption takes effect from the date on which the notice was received by the FSCS, subject to COMP 13.3.6 R.1

COMP 13.3.1A R 14/01/2005

2 COMP 13.3.1 R does not apply to a participant firm that may be subject to a claim under COMP 3.2.4 R.

COMP 13.3.1B G 14/01/2005

2A participant firm to which COMP 13.3.1A R applies must report annual eligible income in accordance with COMP 13.6.11 R. Such a participant firm may take advantage of the option to report its annual income attributable to business conducted with or on behalf of eligible claimants.

COMP 13.3.2 R 01/02/2004

[deleted]1

COMP 13.3.3 G 01/02/2004

[deleted]1

COMP 13.3.4 R 01/02/2004

A participant firm which is exempt under COMP 13.3.1 R must notify the FSCS in writing as soon as reasonably practicable if the conditions in COMP 13.3.1 R no longer apply.1

COMP 13.3.5 G 01/12/2001

A participant firm to which the conditions in COMP 13.3.1 R no longer apply will then become subject to COMP 13.4, 13.6, and 13.8

COMP 13.3.6 R 01/02/2004

If a participant firm ceases to conduct business that could give rise to a protected claim by an eligible claimant and notifies the FSCS of this under COMP 13.3.1 R (1), it will be treated as a participant firm to which COMP 13.8.7 R applies until the end of the financial year of the compensation scheme in which the notice was given.1

COMP 13.3.7 G 01/02/2004

1The financial year of the compensation scheme is the twelve months ending on 31 March.

COMP 13.4 The FSCS's power to impose levies

General limits on levies

COMP 13.4.1 R 01/12/2001

The FSCS may at any time impose a management expenses levy or a compensation costs levy, provided that the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are, or will be, insufficient, taking into account:

(1)
in the case of a management expenses levy, the level of the FSCS's anticipated expenditure in respect of those expenses in the financial year of the compensation scheme in relation to which the levy is imposed; and
(2)
in the case of a compensation costs levy, the level of the FSCS's anticipated expenditure in respect of compensation costs in the 12 months following the levy.

COMP 13.4.2 G 01/12/2001

The calculation of levies will also take into account previous levies, where funds raised in anticipation of meeting liabilities prove either more or less than the amount actually required.

COMP 13.4.3 G 01/12/2001

The FSCS may impose one or more levies in a financial year to meet either its management expenses or its compensation costs. The FSCS may also impose interim levies, as part of its overall levy commitment. This flexibility allows the FSCS to phase its financing over the course of a financial year and thus avoid collecting levies from firms before the money is actually needed. The FSCS has committed itself in the Memorandum of Understanding with the FSA (the text of which can be found on the FSA website www.fsa.gov.uk) to publish regularly an indicative timetable for its levy procedures

COMP 13.4.4 G 01/12/2001

The discretion over levying in COMP also gives the FSCS, if it thinks this appropriate, the ability to use third parties as its agents in raising and collecting the levies.

Limits on compensation costs levies on sub-schemes

COMP 13.4.5 R 01/12/2001

The FSCS must not require a participant firm in the accepting deposits sub-scheme to pay a share of a compensation costs levy allocated to that sub-scheme to the extent that:

(1)
the share in question; plus
(2)
all previous amounts paid by the firm either as its share of levies allocated to that sub-scheme, or under the Deposit Protection Scheme (deducting from those amounts any amount refunded under COMP 13.4.17R - COMP 13.4.18R or by the Deposit Protection Scheme);

amounts to more than 0.3% of the firm's protected deposits.

COMP 13.4.6 R 01/12/2001

The FSCS must not require a participant firm in the insurance business sub-scheme to pay a share of a compensation costs levy allocated to that sub-scheme in any financial year of the compensation scheme, to the extent that the share in question, together with all previous amounts paid by the firm as its share of compensation costs levies allocated to that sub-scheme in that financial year, amounts to more than 0.8% of the participant firm's relevant net premium income.

COMP 13.4.7 R 01/12/2001

The maximum amount of compensation costs for which the FSCS can levy the designated investment business sub-scheme in any one financial year of the compensation scheme is limited to £400 million.

COMP 13.4.7A R 31/10/2004

3The FSCS must not require a participant firm in the mortgage advice and arranging sub-scheme to pay a share of a compensation costs levy allocated to that sub-scheme in any financial year of the compensation scheme, to the extent that:

(1)
the share in question; plus
(2)
all previous amounts paid by the firm as its share of compensation costs levies allocated to that sub-scheme in that financial year;

amounts to more than 0.8% of the participant firm's annual eligible income.

COMP 13.4.7B R 31/10/2004

3The FSCS must not require a participant firm in the general insurance mediation sub-scheme to pay a share of a compensation costs levy allocated to that sub-scheme in any financial year of the compensation scheme, to the extent that:

(1)
the share in question; plus
(2)
all previous amounts paid by the firm as its share of the compensation costs levy allocated to that sub-scheme in that financial year;

amounts to more than 0.8% of the participant firm's annual eligible income.

Levy for compensation costs paid in error

COMP 13.4.8 R 01/12/2001

The FSCS may include in a compensation costs levy the costs of compensation paid by the FSCS in error, provided that the payment was made in good faith.

Management of funds

COMP 13.4.9 R 01/12/2001

The FSCS must hold any amount collected from a specific costs levy or compensation costs levy to the credit of the sub-schemes and relevant contribution groups, in accordance with the allocation established under COMP 13.5.6 R and COMP 13.6.2 R.

COMP 13.4.10 R 01/12/2001

Any funds received by the FSCS by way of levy or otherwise for the purposes of the compensation scheme are to be managed as the FSCS considers appropriate, and in doing this the FSCS must act prudently.

COMP 13.4.11 R 01/12/2001

Interest earned by the FSCS in the management of funds held to the credit of a contribution group must be credited to that contribution group, and must be set off against the management expenses allocated to that contribution group.

COMP 13.4.12 R 01/12/2001

The FSCS must keep accounts which show:

(1)
the funds held to the credit of each sub-scheme and relevant contribution group; and
(2)
the liabilities of that sub-scheme and relevant contribution group.

COMP 13.4.13 R 01/12/2001

The FSCS may use the money collected from firms within one sub-scheme to pay compensation costs in respect of any contribution group within that sub-scheme, so long as it ensures that this is done without prejudice to the participant firms from whom the money has been collected.

COMP 13.4.14 G 01/12/2001

COMP 13.4.13 R means that, for example:

(1)
when crediting interest underCOMP 13.4.11 R, the FSCS should regard any money collected from one contribution group which has been used to pay the compensation costs of another contribution group within the same sub-scheme as standing to the credit of the first contribution group; and
(2)
the FSCS should not raise a levy under COMP 13.4.1 R on a contribution group solely because, as a result of the FSCS's action under COMP 13.4.13R, there appear to be insufficient funds available to the credit of the contribution group to meet its expenses.

COMP 13.4.15 R 01/12/2001

(1)
The FSCS may use any money held to the credit of one sub-scheme (the creditor sub-scheme) to pay compensation costs in respect of another sub-scheme (the debtor sub-scheme) if the FSCS has reasonable grounds to believe that this would be more economical than borrowing funds from a third party or raising a levy.
(2)
Where the FSCS acts in accordance with (1), it must ensure that:
1. (a)
  the creditor sub-scheme is reimbursed by the debtor sub-scheme as soon as possible;
2. (b)
  the debtor sub-scheme pays interest at a rate equivalent to the Bank of England's repo rate from time to time in force; and
3. (c)
  the amount lent by the creditor sub-scheme to the debtor sub-scheme is taken into account by the FSCS when considering whether to impose a compensation costs levy on the creditor sub-scheme under COMP 13.4.1R.

COMP 13.4.15A R 01/03/2003

(1)
1The FSCS may use any money held to the credit of any sub-scheme to repay borrowing from a third party incurred to pay establishment costs, if in the opinion of the FSCS this would be to the benefit of participant firms.
(2)
Where the FSCS acts in accordance with (1), it must ensure that:
1. (a)
  future establishment costs levies are used first to repay all amounts borrowed from the appropriate sub-schemes;
2. (b)
  interest is paid to the appropriate sub-schemes at a rate equivalent to the Bank of England's repo rate from time to time in force; and
3. (c)
  the amount lent by any sub-scheme is taken into account by the FSCS when considering whether to impose a levy under COMP 13.4.1 R.

COMP 13.4.16 R 01/12/2001

UnlessCOMP 13.4.17 R applies, any recoveries made by the FSCS in relation to protected claims must be credited to the contribution groups to which the related compensation costs were allocated.

COMP 13.4.17 R 01/12/2001

If the FSCS makes recoveries in relation to protected claims where the related compensation costs were allocated to the accepting deposits sub-scheme, or in relation to compensation paid out of a special contribution under the Deposit Protection Scheme, and if the FSCS refunds the recoveries underCOMP 13.4.18 R, it must ensure that, as far as possible, the recoveries are refunded to the firms that contributed to the relevant compensation costs levy or special contribution (whether or not the firms are participant firms at the time that the recoveries are made).

COMP 13.4.18 R 01/12/2001

If the FSCS has more funds to the credit of a contribution group than the FSCS believes will be required to meet levies on that contribution group for the next 12 months, it may refund the surplus to members or former members of the contribution group on any reasonable basis.

Adjustments to calculation of levy shares

COMP 13.4.19 R 01/12/2001

The FSCS may adjust the calculation of a participant firm's share of any levy to take proper account of:

(1)
any excess, not already taken into account, between previous levies of that type imposed in relation to previous periods and the relevant costs actually incurred in that period; or
(2)
participant firms that are exempt from the levy under COMP 13.3; or
(3)
amounts that the FSCS has not been able to recover from participant firms as a result of COMP 13.4.5R or COMP 13.4.6R; or
(4)
amounts that the FSCS has not been able to recover from participant firms after having taken reasonable steps; or
(5)
COMP 13.5.8R (New participant firms), COMP 13.4.20R (Remission of levy) or COMP 13.7 (Incoming EEA firms); or
(6)
anything else that the FSCS believes on reasonable grounds should be taken into account.

Remission of levy or additional administrative fee

COMP 13.4.20 R 01/03/2003

If a participant firm's share of a levy or an additional administrative fee under COMP 13.8.4 R would be so small that, in the opinion of the FSCS, the costs of collection would be disproportionate to the amount payable, the FSCS may treat the participant firm as if its share of the levy or additional administrative fee amounted to zero.1

Levies on the Society of Lloyd's

COMP 13.4.21 R 01/01/2004

The FSCS may impose a levy on the Society to be calculated as the aggregate of the levies that would be imposed on each member if this chapter applied to members, as follows:

(1)
a share of any unexpired portion of an establishment costs levy;
(2)
a proportionate share of a base costs levy in respect of the compensation scheme's costs for the period from 1 January 2004 to the end of the compensation scheme's financial year and a share of such levies for all subsequent financial years;
(3)
a specific costs levy and a compensation costs levy in respect of costs arising out of a relevant person being in default, arrangements made under COMP 3.3.1 R or measures taken under COMP 3.3.3 R where:2
1. (a)
  the default occurs or the circumstances giving rise to the arrangements being made or the measures being taken, as the case may be, occur; and2
2. (b)
  the protected contracts of insurance in connection with which the costs arise were entered into;2
on or after 1 January 2004.2

COMP 13.5 Management expenses

Obligation on participant firm to pay

COMP 13.5.1 R 01/12/2001

A participant firm must pay to the FSCS a share of each management expenses levy.

Limit on management expenses

COMP 13.5.2 R 01/12/2001

The total of all management expenses levies attributable to a particular period of the compensation scheme may not exceed the limit applicable to that period set out in COMP 13 Ann 1 R.

Participant firm's share

COMP 13.5.3 R 01/12/2001

A participant firm's share of a management expenses levy consists of one or more of:(1) a share of a base costs levy; and(2) a share of a specific costs levy; and(3) a share of an establishment costs levy.

COMP 13.5.4 R 01/12/2001

The FSCS must ensure that each participant firm's share of a management expenses levy separately identifies the firm's share of the base costs levy, specific costs levy and establishment costs levy.

Base costs levy

COMP 13.5.5 R 01/12/2001

Unless COMP 13.4.19 R applies, the FSCS must calculate a participant firm's share of a base costs levy by:

(1)
identifying the base costs which the FSCS has incurred, or expects to incur, in the relevant financial year of the compensation scheme, but has not yet levied;
(2)
calculating the amount of the participant firm's regulatory costs as a proportion of the total regulatory costs relating to all participant firms for the relevant financial year; and
(3)
applying the proportion calculated in (2) to the figure in (1).

Specific costs levy

COMP 13.5.6 R 18/07/2002

(1)
The FSCS must (subject to (2)) allocate any specific costs levy amongst the sub-schemes and relevant contribution groups in proportion to the volume of relevant costs arising from, or expected to arise from, claims in respect of the different activities represented by those contribution groups.
(2)
The FSCS must allocate any part of a specific costs levy that relates to IFA pensions review claims in accordance with COMP 13.6A.1 R (IFA pensions review compensation levies).1

COMP 13.5.7 R 18/07/2002

The FSCS must calculate a participant firm's share of a specific costs levy (subject to COMP 13.4.19 R (Adjustments to calculation of levy shares) and COMP 13.6A.1 R (IFA pensions review compensation levies)) by:

(1)
identifying each of the sub-schemes and relevant contribution groups within those sub-schemes to which the participant firm belongs, using the statement of business most recently supplied under COMP 13.6.11 R;
(2)
identifying the management expenses other than base costs or establishment costs which the FSCS has incurred, or expects to incur, in the relevant financial year of the compensation scheme, allocated to the contribution groups identified in (1), but not yet levied;
(3)
calculating, in relation to each relevant contribution group, the participant firm's tariff base as a proportion of the total tariff base of all participant firms in the contribution group, using the statement of business most recently supplied under COMP 13.6.11 R;
(4)
applying the proportion calculated in (3) to the figure in (2); and
(5)
if more than one sub-scheme or contribution group is relevant, adding together the figure in (4) for each contribution group.1

New participant firms

COMP 13.5.8 R 01/12/2001

A firm which becomes a participant firm part way through a financial year of the compensation scheme will not be liable to pay a share of a specific costs levy made in that year.

COMP 13.5.9 G 01/12/2001

New participant firms will normally have relevant tariff bases of nil as at 31 December in the financial year preceding that in which they join, so that they will not be required to pay a share of a specific costs levy (or a compensation costs levy because of COMP 13.6.6 R). COMP 13.5.8 R means that the FSCS does not have to estimate the tariff base of a new participant firm.

COMP 13.5.10 G 01/04/2004

Since a firm that becomes a participant firm in the course of a financial year of the compensation scheme will already be obtaining a discount in relation to the base costs levy and the establishment costs levy through the modified fee provisions of SUP 20.4.4, no rule is necessary in COMP for discounts on the base costs levy or the establishment costs levy.2

Establishment costs levy

COMP 13.5.11 R 01/12/2001

The FSCS must calculate a participant firm's share of an establishment costs levy on the same basis as a base costs levy under COMP 13.5.5 R.

COMP 13.5.12 R 01/12/2001

The FSCS may not impose an establishment costs levy after the end of the third full financial year of operation of the compensation scheme.

COMP 13.6 Compensation costs

COMP 13.6.1 R 01/12/2001

The compensation costs levy is made up of compensation costs incurred by the FSCS, together with any compensation costs which can reasonably be anticipated as arising in the 12 months following the levy date, and which in each case have not already been subject to a levy.

COMP 13.6.2 R 18/07/2002

(1)
The FSCS must (subject to (2)) allocate any compensation costs levy to the individual sub-schemes and relevant contribution groups in proportion to the volume of compensation costs arising from, or expected to arise from, claims in respect of the different activities represented by those contribution groups.
(2)
The FSCS must allocate any part of a compensation costs levy that relates to IFA pensions review claims in accordance with COMP 13.6A.1 R (IFA pensions review compensation levies).2

COMP 13.6.3 R 01/12/2001

If a participant firm which is in default has carried on a regulated activity other than in accordance with a permission, the FSCS must allocate any compensation costs or specific costs arising out of that activity to the relevant contribution group which covers that activity.

COMP 13.6.4 R 01/12/2001

If the relevant person in default is an appointed representative, the FSCS must allocate any compensation costs or specific costs arising out of a regulated activity for which his principal has not accepted responsibility to the relevant contribution group for that activity.

COMP 13.6.5 R 01/04/2004

A participant firm must pay to the FSCS a share of each compensation costs levy unless either the firm is exempt under COMP 13.3 (Exemption) or the FSCS has chosen to exercise its discretion under COMP 13.4.20 R in respect of that firm.5

COMP 13.6.6 R 18/07/2002

The FSCS must calculate a participant firm's share of a compensation costs levy (subject to COMP 13.6A.1 R (IFA pensions review compensation levies)) on the same basis as a specific costs levy under COMP 13.5.6 R, COMP 13.5.7 R and COMP 13.5.8 R.2

COMP 13.6.7 R 31/10/2004

When calculating a participant firm's share of a compensation costs levy or specific costs levy allocated to:

(1)
the accepting deposits sub-scheme or the insurance business sub-scheme, the FSCS must use the contribution groups and tariff bases as set out in the table in COMP 13.6.8 R.;
(2)
the investment business sub-scheme, the FSCS must (unless (3) applies) use as the contribution groups and tariff bases the correspondingly numbered activity groups and tariff bases set out in part 1 and part 2 of SUP 20 Annex 1 which are identified in COMP 13.6.9 R;
(3)
the investment business sub-scheme, where any part of the levy relates to IFA pensions review claims, the FSCS must comply with COMP 13.6A.1 R (IFA pensions review compensation levies);
(4)
the mortgage advice and arranging sub-scheme, the FSCS must use the contribution group and tariff base set out in the table in COMP 13.6.9A R;6
(5)
the general insurance mediation sub-scheme, the FSCS must use the contribution group and tariff base set out in the table in COMP 13.6.9B R.6 4 2

COMP 13.6.8 R 01/12/2001

Table: Contribution Groups for the Accepting Deposits Sub-scheme and the Insurance Business Sub-scheme for the Financial Services Compensation Scheme (see COMP 13.6.7 R (1))

SUB-SCHEME	CONTRIBUTION GROUP (references to A1, A2 etc are to the FSA fee Blocks)	LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order)	TARIFF BASE
Accepting deposits	A1 - deposit takers	Accepting deposits (article 5)	Protected deposits (see COMP 13.6.13R)
Insurance business	A3 - Insurance activities - General insurance	Effecting contracts of insurance and/or carrying out contracts of insurance (article 9) that are general insurance contracts	Relevant net premium income
Insurance business	A4 - insurance activities - Life Insurance	Effecting contracts of insurance and/or carrying out contracts of insurance (article 9) that are long-term insurance contracts	Relevant net premium income

COMP 13.6.9 R 01/04/2004

Table: The contribution groups and tariff bases for the investment business sub-scheme (see COMP 13.6.7 R (2)). (The contribution groups, legal bases for activity and tariff bases are the same as the correspondingly numbered activity groups and tariff bases set out in part 1 and part 2 of SUP 20 Ann 1).

SUB-SCHEME	CONTRIBUTION GROUP (references to A7 etc are to the activity groups in part 1 of SUP 20 Ann 1R)	LEGAL BASIS FOR ACTIVITY (this is merely a summary of the basis in part 1 of SUP 20 Ann 1R; references to articles are to articles of the Regulated Activities Order)	TARIFF BASE (this is merely a summary of the base in part 2 of SUP 20 Ann 1R
Designated investment business	A7 - fund managers	Managing investments (article 33)	Funds under management
Designated investment business	A9 - managers of an AUT, ACDs and depositaries	Any of the following: (a) establishing, operating or winding up a collective investment scheme; (b) acting as a trustee of an authorised unit trust scheme; (c) acting as a depositary, or sole director of an open-ended investment company (article 48)	Gross income
Designated investment business	A10 - dealing as principal	Dealing in investments as principal (article 12).	Number of traders
Designated investment business	A12 - advisory brokers (excluding corporate finance advisers) - holding either client money or assets	Any of the following: (a) dealing in investments as agent (article 19); (b) arranging (bringing about) deals in investments (article 21(1)); (c) making arrangements with a view to transactions in investments (article 22(2)); with permission to: (i) advise on investments (article 49); (ii) hold client money; and (iii) safeguarding and administering investments (article 36)	Number of approved persons
Designated investment business	A13 - advisory brokers (excluding corporate finance adviser) - not holding either client money or assets	Any of the following: (a) dealing in investments as agent (article 19); (b) arranging (bringing about) deals in investments (article 21(1)); (c) making arrangements with a view to transactions in investments (article 22(2)); with permission to advise on investments (article 49); but not to (i) hold client money; and (ii) safeguard and administer investments (article 36).	Number of approved persons
Designated investment business	A14 - corporate finance advisory firms	Permission includes a requirement that the firm must not conduct designated investment business other than corporate finance business	Number of approved persons 4 3 2 1

COMP 13.6.9A R 31/10/2004

6Table: the contribution groups and tariff bases for the mortgage advisers and arrangers (see COMP 13.6.7 R (4))

SUB-SCHEME	CONTRIBUTION GROUP (REFERENCES TO A1, A2 ETC ARE TO THE FSA FEE BLOCKS)	LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order)	TARIFF BASE
Mortgage advice and arranging	A18 - Mortgage lenders, advisers and arrangers	Any of the following: (a) arranging (bringing about) regulated mortgage contracts; (b) making arrangements with a view to regulated mortgage contracts; (c) advising on regulated mortgage contracts; (d) agreeing to carry on a regulated activity which is within any of the above; and (e) the activities of a mortgage lender which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts to which the arranger is a party).	annual eligible income

COMP 13.6.9B R 31/10/2004

6Table: the contribution groups and tariff bases for the general insurance intermediaries (see COMP 13.6.7 R (5))

SUB-SCHEME	CONTRIBUTION GROUP (REFERENCES TO A1, A2 ETC ARE TO THE FSA FEE BLOCKS)	LEGAL BASIS FOR ACTIVITY (references to articles are to articles of the Regulated Activities Order)	TARIFF BASE
General insurance mediation	A.19 General insurance mediation	Any of the following in relation to a non-investment insurance contract: (a) dealing in investments as agent; (b) arranging (bringing about) regulated mortgage contracts; (c) making arrangements with a view to transactions in investments; (d) assisting in the administration and performance of a contract of insurance; (e) advising on investments; and (f) agreeing to carry on a regulated activity which is within any of the above	annual eligible income

COMP 13.6.10 G 01/12/2001

A participant firm may belong to more than one sub-scheme, and more than one contribution group within the same sub-scheme.

COMP 13.6.11 R 01/04/2005

Unless exempt under COMP 13.3.1 R, a participant firm must provide the FSCS by the end of February each year (or, if it has become a participant firm part way through the financial year, by the date requested by the FSA) 7with a statement of:

(1)
the contribution groups to which it belongs; and
(2)
the total amount of business (measured in accordance with the appropriate tariff base or bases) which it conducted, as at 31 December of the previous year, in relation to each of those contribution groups.

COMP 13.6.12 R 01/12/2001

If the information in COMP 13.6.11 R has been provided to the FSA under other rule obligations, a participant firm will be deemed to have complied with COMP 13.6.11 R.

COMP 13.6.13 R 01/12/2001

Where a participant firm can identify that a protected deposit was made by a person who is not an eligible claimant, it may exclude the amount of that deposit from the tariff base, provided that it notifies the FSCS of the amount of the deposit so excluded and provides the FSCS with such information about the deposit as the FSCS may reasonably require.

COMP 13.6.14 R 01/04/2005

If a participant firm does not submit a complete statement by the date on which it is due in accordance with COMP 13.6.11 R and any prescribed submission procedures:7

(1)
the firm must pay an administrative fee of £250 (but not if it is already subject to an administrative fee under SUP 20 Annex 2 Part 1 or DISP 5.5.1 R for the same financial year); and7
(2)
the compensation costs levy and any specific costs levy will be calculated using (where relevant) the valuation or valuations of business applicable to the previous period, multiplied by the factor of 1.10 (or, if it has become a participant firm part way through a financial year, on the basis of the information provided to the FSA for the purposes of SUP 20.3.2R) or on any other reasonable basis, making such adjustments as seem appropriate in subsequent levies once the true figures are known.7

COMP 13.6A IFA pensions review compensation levies

COMP 13.6A.1 R 18/07/2002

1The FSCS must allocate any part of a specific costs levy or compensation costs levy that relates to IFA pensions review claims:

(1)
to participant firms which were liable to pay the PIA pensions review compensation costs levy in 2001/2002; and
(2)
in the same percentage share as that levy (adjusted to distribute the share of any previous contributor, which is not a participant firm, among remaining participant firms in accordance with their percentage shares).

COMP 13.7 Incoming EEA firms

COMP 13.7.1 R 14/01/2005

If an incoming EEA firm, which is a BCD credit institution, an IMD insurance intermediary or ISD investment firm, is a participant firm, the FSCS must give the firm such discount (if any) as is appropriate on the share of any levy it would otherwise be required to pay, taking account of the nature of the levy and the extent of the compensation coverage provided by the firm's Home State scheme.1

COMP 13.8 Payment of levies

COMP 13.8.1 R 01/12/2001

A participant firm must pay its share of any levy made by the FSCS:

(1)
in one payment; or
(2)
where the FSCS agrees, quarterly, at the beginning of each quarter, by direct debit agreement.

COMP 13.8.2 G 01/12/2001

The amount paid under a direct debit arrangement will be adjusted on a continuous basis to take account of interim levies and other adjustments made during the course of the financial year.

COMP 13.8.3 R 01/12/2001

A participant firm's share of a levy to which COMP 13.8.1 R (1) applies is due on, and payable within 30 days of, the date when the invoice is issued.

COMP 13.8.4 R 01/04/2005

If a participant firm does not pay its share of a levy as required by COMP 13.8.3 R, it must thereafter pay additional administrative fees of £250 plus interest 1on any unpaid part of the levy 1at a rate of 5% over the Bank of England's repo rate,1 from time to time in force,1 accruing on a daily basis from the date on which the payment was due.

1 1

COMP 13.8.5 R 01/12/2001

If a participant firm does not pay its share of a levy subject to a direct debit agreement as required by COMP 13.8.1 R (2), the entire amount of the levy becomes due and payable to the FSCS, and additional administrative fees are payable at the rate set out in COMP 13.8.4 R.

COMP 13.8.6 R 01/12/2001

If a participant firm fails to make payment under COMP 13, the FSCS may:

(1)
take steps to recover any money owed; or
(2)
refer the matter to the FSA so that the FSA may take whatever disciplinary action it considers necessary; or
(3)
do both (1) and (2).

COMP 13.8.7 R 01/12/2001

If a firm ceases to be a participant firm part way through a financial year of the compensation scheme:

(1)
it will remain liable for any unpaid levies which the FSCS has already made on the firm; and
(2)
the FSCS may make a levy upon it (which may be before or after the firm has ceased to be a participant firm, but must be before it ceases to be an authorised person) for the costs which it would have been liable to pay had the FSCS made a levy on all participant firms at the time of the levy on the firm.

COMP 13 Ann 1 COMP 13 Ann 1R: Management Expenses Levy Limit

R 01/04/2005

This table belongs to COMP 13.5.2 R

Period	Limit on total of all management expenses levies attributable to that period (£)
1 December 2001 to 1 April 2002	£4,209,000
1 April 2002 to 31 March 2003	£13,228,0001
1 April 2003 to 31 March 2004	£13,319,0002
1 April 2004 to 31 March 2005	£17,590,0004 3
1 April 2005 to 31 March 2006	£27,030,0005

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