FEES 2.1 Introduction
Application
621This chapter does not apply in relation to FEES 5.5A, FEES 5 Annex 2R or FEES 5 Annex 3R.
FEES 2.2.1R does not apply in respect of any fee payable under FEES 3 (Application, notification and vetting fees).
The provisions for late payments in FEES 2.2.1R do not apply to fees payable under FEES 3 as applications, notifications and requests for vetting are generally regarded as incomplete until the relevant fee is paid.
Purpose
Paragraph 23 of Schedule 1ZA18 of2 the Act,7 regulation 92 of the Payment Services Regulations and 3 regulation 59 of the Electronic Money Regulations 7 enable the FCA 18 to charge fees to cover its costs and expenses in carrying out its functions. The corresponding provisions for the FSCS levy ,5 FOS levies and CFEB levies5 are set out in FEES 6.1,5 FEES 5.2 and FEES 7.1.4 G5 respectively. Case fees payable to the FOS Ltd are set out in FEES 5.5A. 621 Fee-paying payment service providers and fee-paying electronic money issuers 7 are not required to pay the FSCS levy but are liable for FOS levies.4
218218562153Regulation 92 of the Payment Services Regulations and regulation 59 of the Electronic Money Regulations each provide7 that the functions of the FCA18 under the respective7 regulations are treated for the purposes of paragraph 23 of Schedule 1ZA18 to the Act as functions conferred on the FCA18 under the Act. Paragraphs 23(7) and 20(1)(b) 18 however, have not been included .7 These are, respectively, the FCA's187 obligation to ensure that the amount of penalties received or expected to be received are not to be taken into account in determining the amount of any fee payable and the provision that allows fees to be raised to repay borrowed monies in respect of expenses incurred, before or after the coming into force of the Act or the Bank of England Act 1998.
718181818718The appropriate regulator 18fees payable will vary from one fee year18 to another, and will reflect the appropriate regulator's 18funding requirement for that period and the other key components, as described in FEES 2.1.7G. Periodic fees, which will normally be payable on an annual basis, will provide the majority of the funding required to enable the appropriate regulator 18to undertake its statutory functions.
18181818The key components of the appropriate regulator fee mechanism (excluding the FSCS 5levy, the FOS5 levy and case fees, and the CFEB levy 5which are dealt with in FEES 5,5 FEES 6 and FEES 7)5 are:
555- (1)
a funding requirement derived from:
- (a)
the appropriate regulator's financial management and reporting framework;
- (b)
the appropriate regulator's budget; and
- (c)
adjustments for audited variances between budgeted and actual expenditure in the previous accounting year, and reserves movements (in accordance with the appropriate regulator's reserves policy);
- (a)
- (2)
mechanisms for applying penalties received during previous financial years for the benefit of fee payers;
- (3)
fee-blocks, which are broad groupings of fee payers offering similar products and services and presenting broadly similar risks to the appropriate regulator's regulatory objectives;
- (4)
a costing system to allocate an appropriate part of the funding requirement to each fee-block; and
- (5)
tariff bases, which, when combined with fee tariffs, allow the calculation of fees.
The amount payable by each fee payer will depend upon the category (or categories) of regulated activity or exemption, or other relevant activity applicable to that person (fee-blocks). It will, in most cases, also depend on the amount of the business that person conducts in each category (fee tariffs).
By basing fee-blocks on categories of business, the appropriate regulator aims to minimise cross-sector subsidies. The membership of the fee-blocks is identified in the FEES provisions relating to the type of fees concerned.
18PRA-authorised persons and persons seeking to become PRA-authorised persons should note that the FCA and the PRA have agreed for the FCA to act as the PRA's agent in relation to the collection of PRA fees. Where applicable, both PRA and FCA fees should be paid as a single payment to the FCA, which will receive the payment in its own capacity in respect of FCA fees and in its capacity as agent for the PRA in respect of the PRA fees. References to this arrangement will be referred to in FEES where applicable.