FEES 5.1 Application and Purpose

Application

FEES 5.1.1 R 01/01/2006

1 16This chapter applies to:

(1)
every firm which is subject to the Compulsory Jurisdiction of the Financial Ombudsman Service; and
(2)
every other person who is subject to the Compulsory Jurisdiction in relation to relevant complaints.

FEES 5.1.2 G 01/01/2006

The relevant provisions of FEES 5 are applied to VJ participants by the standard terms (see DISP 4).

FEES 5.1.3 G 01/01/2006

References in this chapter to "firms" are to be construed, where relevant, as including:

(1)
in accordance with the Ombudsman Transitional Order, unauthorised persons subject to the Compulsory Jurisdiction in relation to relevant complaints (see Transitional Provisions 6 and 7 of DISP); and
(2)
as a result of section 226 of the Act, unauthorised persons who were formerly firms in respect of complaints about acts or omissions which occurred at the time when they were firms, provided that the Compulsory Jurisdiction rules were in force in relation to the activity in question.

Exemption

FEES 5.1.4 R 01/01/2006

A firm which is exempt under DISP 1.1.7 R is also exempt from FEES 5.1 toFEES 5.7.

FEES 5.1.5 R 01/01/2006

A firm which ceases to be exempt under FEES 5.1.4 R is to be treated, for the purposes of its contribution to the general levy, as a firm to which FEES 5.8 applies.

FEES 5.1.6 R 01/01/2006

A firm which becomes exempt under FEES 5.1.4 R during the course of a financial year is to be treated for the purposes of its contribution to the general levy, as a firm to which FEES 5.9 applies.

Purpose

FEES 5.1.7 G 01/01/2006

The purpose of this chapter is to set out the requirements on firms to pay annual fees (through a general levy and supplementary levy invoiced and collected by the FSA on behalf of FOS Ltd) and case fees (invoiced and collected directly by FOS Ltd) in order to fund the operation of the Financial Ombudsman Service.This chapter also contains a requirement on firms to pay a supplementary levy towards the costs of establishing the Financial Ombudsman Service. It also provides for unauthorised persons to pay case fees to FOS Ltd in respect of any relevant complaints which it handles.

FEES 5.2 Introduction

FEES 5.2.1 G 01/01/2006

Paragraph 9 of Schedule 17 to the Act (The Ombudsman Scheme) requires FOS Ltd to adopt an annual budget which has been approved by the FSA. The annual budget must distinguish between the costs of operating the Compulsory Jurisdiction and the Voluntary Jurisdiction.

FEES 5.2.2 G 01/01/2006

Section 234 of the Act (Industry Funding) enables the FSA to require the payment to it or to FOS Ltd, by firms or any class of firm, of specified amounts (or amounts calculated in a specified way) to cover the costs of:

(1)
the Financial Ombudsman Service; and
(2)
its operation in relation to the Compulsory Jurisdiction.

FEES 5.2.3 G 01/01/2006

Paragraph 15 of Schedule 17 to the Act enables FOS Ltd to require firms subject to the Compulsory Jurisdiction and any other respondents to a complaint to pay specified fees to it in respect of complaints closed by the Financial Ombudsman Service.

FEES 5.2.4 G 01/01/2006

The Ombudsman Transitional Order provides for unauthorised persons to be charged fees in respect of any relevant complaints against them which the Financial Ombudsman Service handles.

FEES 5.2.5 G 01/01/2006

Paragraph 18 of Schedule 17 to the Act enables FOS Ltd to require VJ participants to pay to it such amounts at such times as it specifies in the standard terms.

FEES 5.2.6 G 01/01/2006

The relevant provisions of the rules in FEES 5 and FEES 2 will be applied to VJ participants through the standard terms made by FOS Ltd under paragraph 18 of Schedule 17 to the Act (see DISP 4).

FEES 5.2.7 G 01/01/2006

This chapter sets out the framework for the funding arrangements of the Financial Ombudsman Service, including the method by which fees will be calculated. Details of the actual fees payable will vary from year to year, depending on the annual budget of the Financial Ombudsman Service. These details will be set out in an annexto this chapter (FEES 5 Annex 1). A new annex will be prepared and consulted on for each financial year.

FEES 5.3 The general levy

FEES 5.3.1 G 01/01/2006

Each financial year, the FSA and FOS Ltd will consult on the amount of the annual budgetof the Financial Ombudsman Service which is to be raised by the general levy.

FEES 5.3.2 G 01/01/2006

For the purposes of the general levy, a firm will fall into one or more of the industry blocks set out in FEES 5 Annex 1 depending on the business activities which it conducts.

FEES 5.3.3 G 01/01/2006

The FSA will determine, following consultation, the amount to be raised from each industry block. This will be based on the budgeted costs and numbers of Financial Ombudsman Service staff required to deal with the volume of complaints which the Financial Ombudsman Service expects to receive about the firms in each industry block. Modified arrangements have been made for certain types of small firms (see FEES 5.5.3 R to FEES 5.5.5 G).

FEES 5.3.4 G 01/01/2006

Part 2 of FEES 5 Annex 1 sets out the fee tariffs for each industry block.

FEES 5.3.5 G 01/01/2006

The FSA will specify a minimum levy for firms in each industry block.

FEES 5.3.6 R 01/01/2006

A firm must pay to the FSA a general levy towards the costs of operating the Compulsory Jurisdiction of the Financial Ombudsman Service.

FEES 5.3.7 G 01/01/2006

Under the standard terms, VJ participants will be required to pay to FOS Ltd an amount calculated on a similar basis towards the costs of operating the Voluntary Jurisdiction of the Financial Ombudsman Service. FOS Ltd will be responsible for invoicing and collecting this amount.

FEES 5.3.8 R 01/01/2006

A firm's general levy is calculated as follows:

(1)
identify each of the tariff bases set out in Part 2 of FEES 5 Annex 1 which apply to the relevant business of the firm for the relevant year;
(2)
for each of those tariff bases, calculate the sum payable in relation to the relevant business of the firm for that year;
(3)
add together the amounts calculated under (2).

FEES 5.3.9 R 01/01/2006

For the purpose of FEES 5.3.6 R and FEES 5.3.8 R, a member of the Society of Lloyd's or a managing agent at Lloyd's will not in that capacity be treated as a firm. But the Society of Lloyd's will pay a general levy in respect of Lloyd's insurance business conducted with eligible complainants.

FEES 5.3.10 R 01/01/2006

For the purpose of FEES 5.3, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under Part 2 of FEES 5 Annex 1, are references to the firm's total amount of annual income reported in accordance with Part 2 of FEES 4.

FEES 5.4 Information requirement

FEES 5.4.1 R 01/01/2006

(1)
A firm must provide the FSA by the end of February each year (or, if the firm has become subject to the Financial Ombudsman Service part way through the financial year, by the date requested by the FSA) with a statement
of the total amount of relevant business (measured in accordance with the appropriate tariff base(s)) which it conducted, as at or in the year to 31 December of the previous year as appropriate, in relation to the tariff base for each of the relevant industry blocks set out in part 2 of FEES 5 Annex 1.
(2)
Paragraph (1) does not apply if the firm pays a general levy on a flat fee basis only.
(3)
If a firm cannot provide a statement of the total amount of relevant business as required by FEES 5.4.1 R, it must provide the best estimate of the amount of relevant business that it conducted.
(4)
For the purpose of FEES 5.4.1R, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under part 2 of FEES 5 Annex 1, are references to the firm's total amount of annual income reported in accordance with Part 2 of FEES 4 Annex 1.
(5)
If a firm does not submit a complete statement by the date on which it is due in accordance with this rule and any prescribed submission procedures:
1. (a)
  the firm must pay an administrative fee of 250 (but not if it is already subject to an administrative fee under FEES 4 Annex 2, Part 1 or FEES 6.5.16 R for the same financial year); and
2. (b)
  the general levy and any supplemental 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 a firm has become subject to the Financial Ombudsman Service part way through the financial year, on the basis of the information provided to FSA for the purposes of FEES 4.4.2 R) or on any other reasonable basis, making such adjustments as seem appropriate in subsequent levies once the true figures are known.

FEES 5.4.2 G 01/01/2006

Failure to submit a statement in accordance with the rules in this chapter may also lead to the imposition of a financial penalty and other disciplinary sanctions (see ENF 13.5).

FEES 5.4.3 G 01/01/2006

SUP 16.3 (General provisions on reporting) contains further rules on the method of submission of reports under FEES 5.4.1 R.

FEES 5.4.4 G 01/01/2006

A firm should not provide a statement of relevant business if it deals only with eligible complainants who are not private individuals. Relevant business is defined in the Glossary as business done with private individuals only. So FEES 5.4.1 R does not apply in relation to business done with other types of eligible complainant described in DISP 2.4.3 R (1)(b), (c) and (d); the funding of FOS Ltd in relation to that business is by special case fee only (see FEES 5.5.6 R).

FEES 5.5 Case fees

Standard case fee

FEES 5.5.1 R 01/01/2006

A firm must pay to FOS Ltd the standard case fee specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that firm which is closed by the Financial Ombudsman Service, unless a special case fee is payable or has been paid in respect of that case under FEES 5.5.6 R to FEES 5.5.12 R.

FEES 5.5.2 G 01/01/2006

The standard case fee, which will be subject to consultation each year, will be calculated by dividing the annual budget for the Compulsory Jurisdiction, less the amount to be raised by the general levy, by the estimated number of chargeable cases which the Financial Ombudsman Service expects to close in the relevant financial year.

FEES 5.5.3 R 01/01/2006

A credit union which is subject to the minimum levy in an industry block is not required to pay a standard case fee in respect of chargeable cases relating to that industry block.

FEES 5.5.4 R 01/01/2006

Any firm falling into either industry block 13 or industry block 15 in part 2 of FEES 5 Annex 1 is not required to pay the standard case fee in respect of chargeable cases relating to those industry blocks.

FEES 5.5.5 G 01/01/2006

The firms in industry blocks 13 and 15 are cash plan health providers and small friendly societies. These arrangements have been made in respect of these firms to take account of the fact that the amount at issue is likely to be small relative to the case fee. Instead, the full unit cost of handling complaints against these firms will be recovered through the general levy in accordance with the relevant tariff-base and no case fee will be payable. Similar arrangements have been made under FEES 5.5.3 R in respect of small credit unions.

Special case fees: complaints from small businesses

FEES 5.5.6 R 01/01/2006

A firm must pay to FOS Ltd a special case fee, as specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that firm closed by the Financial Ombudsman Service which was referred to the Financial Ombudsman Service by eligible complainants who fall within DISP 2.4.3 R (1)(b), (c) or (d).

Special case fees: firms which cease to be authorised

FEES 5.5.7 R 01/01/2006

A firm which ceases to be authorised must pay to FOS Ltd a special case fee, as specified in part 3 of FEES 5 Annex 1, in respect of each chargeable case relating to that firm closed by the Financial Ombudsman Service which concerned an act or omission occurring when the firm was authorised and where the complaint was made after its authorisation ceased.

Special case fees: relevant complaints against persons who were subject to a former scheme

FEES 5.5.8 R 01/01/2006

An unauthorised person who is subject to the Compulsory Jurisdiction in relation to a relevant complaint must pay to FOS Ltd a special case fee as specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that unauthorised person closed by the Financial Ombudsman Service.

FEES 5.5.9 G 01/01/2006

Under the Ombudsman Transitional Order, FOS Ltd can handle complaints about members of a former scheme which that scheme could have handled before commencement, even if the unauthorised person concerned does not become authorised by the FSA after that date. Where FOS Ltd handles such complaints, the unauthorised person concerned will be required to pay a special case fee.

Special case fees for 2001/02

FEES 5.5.10 R 01/01/2006

A firm which was a member of PIA before commencement must pay to FOS Ltd a special case fee, as specified in FEES 5 Annex 1, in respect of each chargeable case relating to that firm received by the Financial Ombudsman Service after commencement and before 31 March 2002.

FEES 5.5.11 R 01/01/2006

FEES 5.5.10 R does not apply in relation to a chargeable case which relates to a complaint which proceeded or would have proceeded under a former scheme other than the PIAOB scheme.

FEES 5.5.12 R 01/01/2006

A firm which was not a member of a former scheme before the commencement day must pay to FOS Ltd a special case fee, as specified in FEES 5 Annex 1, in respect of each chargeable case which relates to business conducted by the firm after the commencement day and which is closed by the Financial Ombudsman Service before 31 March 2002.

FEES 5.5.13 G 01/01/2006

The relevant provisions of FEES 5.5 will be applied to VJ participants through the standard terms.

FEES 5.5.14 G 01/01/2006

A firm which was, before commencement, a member of PIA and a former scheme other than the PIAOB scheme will not, on account of the exclusion in FEES 5.5.11 R, be required to pay the special case fee specified by FEES 5.5.10 R in respect of all chargeable cases relating to it but only those which arise in respect of investment business matters which would have been eligible under the PIAOB scheme.

Case fee exemption

FEES 5.5.15 R 01/01/2006

Notwithstanding the above, a firm will only be liable for, and FOS will only invoice for, the standard case fee or, as the case may be, the special case fee, in respect of the third and subsequent chargeable cases in any financial year.

FEES 5.6 The supplementary levy

FEES 5.6.1 G 01/01/2006

For the purposes of calculating the supplementary levy, the FSA will apportion the establishment costs between the industry blocks in the same proportions as the operating costs for the purposes of the general levy. The supplementary levy will therefore be raised from firms on the same basis and at the same time as the general levy (see part 2 of FEES 5 Annex 1).

FEES 5.6.2 G 01/01/2006

The establishment costs will be recovered via the supplementary levy over the first three full financial years of the Financial Ombudsman Service's operation.

FEES 5.6.3 G 01/01/2006

The amount of establishment costs to be raised each year through the supplementary levy will be specified in part 2 of FEES 5 Annex 1.

FEES 5.6.4 G 01/01/2006

The supplementary levy will be identified separately from the general levy for the purposes of invoicing firms and VJ participants.

FEES 5.6.5 R 01/01/2006

A firm must pay to the FSA a supplementary levy towards the costs of establishing the Financial Ombudsman Service.

FEES 5.6.6 R 01/01/2006

A firm's supplementary levy is a sum payable in accordance with the fee tariffs set out in part 2 of FEES 5 Annex 1 and will be calculated by following the steps set out in FEES 5.3.8 R.

FEES 5.6.7 G 01/01/2006

Under the standard terms, VJ participants will also be required to pay an amount calculated on a similar basis towards the costs of establishing the Voluntary Jurisdiction of the Financial Ombudsman Service.

FEES 5.7 Payment

FEES 5.7.1 R 01/01/2006

A firm must pay annually to the FSA the general levy and any supplementary levy to which it is subject, on or before the later of 1 April and 30 calendar days after the date when the invoice is issued by the FSA.

FEES 5.7.2 R 01/01/2006

A firm must pay to FOS Ltd any standard case fee or special case fee which it is liable to pay under FEES 5.5.1 R, FEES 5.5.6 R, FEES 5.5.7 R, FEES 5.5.8 R, FEES 5.5.10 R, or FEES 5.5.12 R, as appropriate, in respect of chargeable cases for which it is invoiced by FOS Ltd within 30 calendar days of the date when the invoice is issued by FOS Ltd.

FEES 5.7.3 R 01/01/2006

A firm or an unauthorised person who is subject to the Compulsory Jurisdiction in relation to a relevant complaint must pay any standard case fee or special case fee within 30 calendar days of the date when the invoice is issued by FOS Ltd.

FEES 5.7.4 R 01/01/2006

A firm liable to pay fees under FEES 5.7.1 R must do so using one of the methods set out in FEES 4.2.4 R save that no additional amount or discount is applicable.

FEES 5.8 Joining the Financial Ombudsman Service

FEES 5.8.1 R 01/01/2006

A firm which becomes subject to the Financial Ombudsman Service part way through a financial year must pay a rateable proportion of the general levy and the supplementary levy as indicated in Table FEES 4.2.6 R, as if that table applied to the quarter in which a firm becomes subject to the Financial Ombudsman Service.

FEES 5.9 Leaving the Financial Ombudsman Service

FEES 5.9.1 R 01/01/2006

Where a firm ceases to be authorised part way through a financial year:

(1)
it will remain liable to pay standard case fees in respect of chargeable cases against it closed by the Financial Ombudsman Service for the remainder of that financial year; and
(2)
it must pay the special case fee specified under FEES 5.5.7 R in respect of any other chargeable cases against it closed by the Financial Ombudsman Service.

FEES 5.9.2 G 01/01/2006

Firms which cease to be authorised and therefore subject to the Compulsory Jurisdiction part way through the year will not receive a refund of their general levy (or supplementary levy) except in exceptional circumstances. Firms will continue to be liable for any case fees relating to chargeable cases closed by the Financial Ombudsman Service after they cease to be authorised. Firms will be charged the standard case fee where the complaint was closed by the Financial Ombudsman Service before the end of the year in which their authorisation ceased. The special case fee will apply to any complaint closed after the end of that year since the firm will no longer be contributing to the general levy.

FEES 5 Annex 1R Annual Fees Payable in Relation to 2006/0746

R 01/06/2006

Introduction: annual budget

1. The annual budget for 2006/07 approved by the FSA is 59.2m.1

Part 1: General levy and supplementary levy

2. The total amount expected to be raised through the general levy in 2006/07 will be 15.8m.1

Part 2: Fee tariffs for general levy and supplementary levy

3. No establishment costs will be raised in 2006/071 by the supplementary levy.

Industry block	Tariff base	General levy payable by firm
1-Deposit acceptors, mortgage lenders and administrators (excluding firms in block 14)	Number of accounts relevant to the activities in DISP 2.6.1 R	0.0059 per relevant account, subject to a minimum levy of 1001
2-Insurers - general (excluding firms in blocks 13 & 15)	Relevant annual gross premium income	0.055 per 1,000 of relevant annual gross premium income, subject to a minimum levy of 100 1
3-The Society (of Lloyd's)	Not applicable	28,0001 to be allocated by the Society
4. Insurers - life (excluding firms in block 15)	Relevant adjusted annual gross premium income	0.124 per 1,000 of relevant adjusted annual gross premium income, subject to a minimum levy of 1001
5-Fund managers (including those holding client money/assets and not holding client money/assets)	Relevant funds under management	0.00071 per 1,000 of relevant funds under management, subject to a minimum levy of 100
6-Operators, trustees and depositaries of collective investment schemes	Flat fee	Levy of 75
7-Dealers as principal	Flat fee	Levy of 50
8-Advisory arrangers, dealers or brokers holding and controlling client money and/or assets	Number of relevant approved persons (controlled functions 21, 22, 24, 25, 26)	160 per relevant approved person(controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of 1601
9-Advisory arrangers, dealers or brokers not holding and controlling client money and/or assets	Number of relevant approved persons (controlled functions 21, 22, 24, 25, 26)	451 per relevant approved person (controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of 50
10-Corporate finance advisers	Flat fee	Levy of 50
11-	N/A for 2006/071
11-
12-	N/A for 2006/071
13-Cash plan health providers	Flat fee	Levy of 50
14-Credit unions	Flat fee	Levy of 50
15-Friendly societies whose tax-exempt business represents 95% or more of their total relevant business	Flat fee	Levy of 50
16-Mortgage lenders, advisersand arrangers (excluding firms in blocks 13, 14 & 15)	Flat fee	Levy of 50
17 - General insurance mediation (excluding firms in blocks 13, 14 & 15)	Flat fee	Levy of 50

4	[not used]
5	The industry blocks in the table are based on the equivalent activity groups set out in Part 1 of FEES 4 Annex 1.
6	Where the tariff base in the table is defined in similar terms as that for the equivalent activity group in Part 2 of FEES 4 Annex 1, it must be calculated in the same way as that tariff base - taking into account only the firm's relevant business.

Part 3: Case fees

Table: Standard case fees and special case fees 46

46 Compulsory jurisdiction - case fee table
case fee
standard case fee	360	(for the third chargeable complaint and any subsequent chargeable complaint in any financial year)
special case fee	475	(for the third chargeable complaint and any subsequent chargeable complaint in any financial year)
The definitions of standard case fee and special case fee are in FEES 5.5, replacing DISP 5.6 (case fees), in the FSA Handbook.
The definition of a chargeable case is in the Glossary to the FSA Handbook.

Part 4: VJ participants 46

Table: Fee tariffs and case fees for VJ participants 46

46 Voluntary jurisdiction - general levy tariff and case fee table
industry block and business activity		tariff basis	tariff rate	minimum levy	case fee*
1V	deposit acceptors, mortgage lenders and administrators, including debit/charge card issuers	number of relevant accounts	0.0042	100	360
2V	firms undertaking insurance activities subject only to prudential regulation	per 1,000 of relevant annual gross premium income	0.052	100	360
3V	firms undertaking insurance activities subject to prudential and conduct of business regulation	Per 1,000 of relevant adjusted annual gross premium income	0.12	100	360
6V	intermediaries	n/a	n/a	50	360
8V	National Savings	n/a	n/a	10,000	360
*note on case fees As for the compulsory jurisdiction, firms will only be charged for the third and subsequent chargeable case in anyfinancial year.

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