FEES 6.5 Compensation costs
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.
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(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.
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(2)
The FSCS must allocate any part of a compensation costs levy that relates to IFA pensions review claims in accordance with FEES 6.5.17 R (IFA pensions review compensation levies).
If a participant firm which is in default has carried on a regulated activity other than in accordance with a permission, the FSCS must allocateany compensation costs or specific costs arising out of that activity to the relevant contribution group which covers that activity .
If the relevant person in default is an appointed representative, the FSCS must allocateany 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
A participant firm must pay to the FSCS a share of each compensation costs levy unless either the firm is exempt under FEES 6.2 (Exemption) or the FSCS has chosen to exercise its discretion under FEES 6.3.23 R in respect of that firm.
The FSCS must calculate a participant firm's share of a compensation costs levy (subject to FEES 6.5.17 R (IFA pensions review compensation levies)) on the same basis as a specific costs levy under FEES 6.4.6 R, FEES 6.4.7 R and FEES 6.4.8 R.
When calculating a participant firm's share of a compensation costs levy or specific costs levy allocated to:
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(1)
the accepting depositssub-scheme or the insurance business sub-scheme, the FSCS must use the contribution groups and tariff bases as set out in the table in FEES 6.5.8 G;
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(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 FEES 4 Ann 1 which are identified in FEES 6.5.9 R;
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(3)
the investment business sub-scheme, where any part of the levy relates to IFA pensions review claims, the FSCS must comply with FEES 6.5.17 R (IFA pensions review compensation levies);
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(4)
the mortgage advice and arranging sub-scheme, the FSCS must use the contribution group and tariff base set out in the table in FEES 6.5.10 R;
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(5)
the general insurance mediation sub-scheme, the FSCS must use the contribution group and tariff base set out in the table in FEES 6.5.11 R.
Contribution Groups for the Accepting Deposits Sub-scheme and the Insurance Business Sub-scheme for the Financial Services Compensation Scheme (see FEES 6.5.7 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 |
|
A1 - deposit takers |
Accepting deposits (article 5) |
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|
Insurance business |
A3 - Insurance activities - General insurance |
Effecting contracts of insurance and/or carrying out contracts of insurance (article 10) that are general insurance contracts |
|
|
Insurance business |
A4 - insurance activities - Life Insurance |
Effecting contracts of insurance and/or carrying out contracts of insurance (article 10) that are long-term insurance contracts |
The contribution groups and tariff bases for the investment business sub-scheme (see FEES 6.5.7 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 part1 and part2 of FEES 4 Ann 1R.)
|
SUB-SCHEME |
CONTRIBUTION GROUP (references to A7 etc are to the activity groups in part 1 of FEES 4 Ann 1R) |
LEGAL BASIS FOR ACTIVITY (this is merely a summary of the basis in part 1 of FEES 4 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 FEES 4 Ann 1R) |
|
Designated investment business |
A7 - fund managers |
Managing investments (article 37) |
Funds under management |
|
Designated investment business |
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 51) |
Gross income |
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|
Designated investment business |
A10 - dealing as principal |
Dealing in investments as principal (article 14). |
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 21); (b) arranging (bringing about) deals in investments (article 25(1)); (c) making arrangements with a view to transactions in investments (article 25(2)); with permission to: (i) advise on investments (article 53); (ii) hold client money; and (iii) safeguarding and administering investments (article 40) |
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 21); (b) arranging (bringing about) deals in investments (article 25(1)); (c) making arrangements with a view to transactions in investments (article 25(2)); with permission to advise on investments (article 53); but not to (i) hold client money; and (ii) safeguard and administer investments (article 40). |
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 |
The contribution groups and tariff bases for the mortgage advisers and arrangers (see FEES 6.5.7 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). |
The contribution groups and tariff bases for the general insurance intermediaries (see FEES 6.5.7 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 ar ticles 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) deals in investments; (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 |
A participant firm may belong to more than one sub-scheme,, and more than one contribution group within the same sub-scheme.
Unless exempt under FEES 6.2.1 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) with a statement of:
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(1)
the contribution groups to which it belongs; and
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(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.
If the information in FEES 6.5.13 R has been provided to the FSA under other rule obligations, a participant firm will be deemed to have complied with FEES 6.5.13 R.
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.
If a participant firm does not submit a complete statement by the date on which it is due in accordance with FEES 6.5.13 R and any prescribed submission procedures:
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(1)
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 5.4.1 R for the same financial year); and
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(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 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.
IFA pensions review compensation levies
The FSCS must allocate any part of a specific costs levy or compensation costs levy that relates to IFA pensions review claims:
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(1)
to participant firms which were liable to pay the PIA pensions review compensation costs levy in 2001/2002; and
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(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).