FEES 6.4 Management expenses

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

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 FEES 6 Annex 1 R.

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.

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 and1 specific costs levy .

Unless FEES 6.3.22 R applies, the FSCS must calculate a participant firm's share of a base costs levy by:

1. (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. (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. (3)

   applying the proportion calculated in (2) to the figurein (1).

1The FSCS must allocate any specific costs levy amongst the relevant sub-classes in proportion to the amount of relevant costs arising from, or expected to arise from, claims in respect ofthe different activities represented by those sub-classes.1

The FSCS must calculate a participant firm's share of a specific costs levy (subject to FEES 6.3.22 R (Adjustments to calculation of levy shares) by:1

1. (1)

   identifying each of the relevant sub-classes 1to which the participant firm belongs, using the statement of business most recently supplied under FEES 6.5.13 R;

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2. (2)

   identifying the management expenses other than base costs which the FSCS has incurred, or expects to incur, in the relevant financial year of the compensation scheme, allocated to the sub-classes1 identified in (1), but not yet levied;

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3. (3)

   calculating, in relation to each relevant sub-class1FF, the participant firm's tariff base as a proportion of the total tariff base of all participant firms in the sub-class1, using the statement of business most recently supplied under FEES 6.5.13 R;

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4. (4)

   applying the proportion calculated in (3) to the figure in (2); and

5. (5)

   if more than one class1 or sub-class1 is relevant, adding together the figure in (4) for each sub-class.1

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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.

1. (1)

   22This rule deals with the calculation of:

   1. (a)

      a participant firm's specific costs levy in the financial year of the FSCS following the FSCS financial year in which it became a participant firm; or

   2. (b)

      a participant firm's specific costs levy in the financial year of the FSCS in which it had its permission extended, and the following FSCS financial year; and

   3. (c)

      the tariff base for the class or sub-classes that relate to the relevant permissions or extensions, as the case may be.

2. (2)

   Unless this rule says otherwise the tariff base is calculated, where necessary, using the projected valuation of the business to which the tariff relates.

3. (3)

   The rest of this rule only applies to a firm that becomes a participant firm, or extends its permission, on or after 1 April 2009.

   1. (a)

      If a participant firm's tariff base is calculated using data from a period that begins on or after it became a participant firm or on or after the date that the participant firm receives its extension of permission, as the case may be, the participant firm must use that data.

   2. (b)

      If a participant firm satisfies the following conditions it must calculate its tariff base under (c) for the FSCS financial year following the FSCS financial year it became a participant firm:

      1. (i)

         it became a participant firm or receives its extension of permission, as the case may be, between 1 April and 31 December inclusive; and

      2. (ii)

         its tariff base, but for this rule, is calculated by reference to the financial year ended in the calendar year ending 31 December or the twelve months ending 31 December before the FSCS financial year.

   3. (c)

      If a participant firm satisfies the conditions in (b) it must calculate its tariff base as follows:

      1. (i)

         it must use actual data in relation to the business to which the tariff relates rather than projected valuations;

      2. (ii)

         the tariff is calculated by reference to the period beginning on the date it became a participant firm or had its permission extended, and ending on the 31 December before the start of the FSCS financial year; and

      3. (iii)

         the figures are annualised by increasing them by the same proportion as the period of 12 months bears to the period starting from when the participant firm became a participant firm or had its permission extended to the 31 December, as the case may be.

   4. (d)

      Where a participant firm is required to use the method in (c) it must notify the FSCS of its intention to do so by the date specified in FEES 6.5.13 R(Reporting Requirements).

   5. (e)

      Where a participant firm is required to use actual data under this rule FEES 6 Annex 3 R is disapplied, to the extent it is incompatible, in relation to the calculation of that participant firm's valuation date in its second financial year.