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FEES App 1 Annex 2 Further information on fees

G

Purpose

1

The purpose of this annex is to set out further information on fees applicable to registered societies which form the registrant-only fee block (Category F).

Background

2

Paragraph 17 of Schedule 1 to the Act enables the FSA to charge fees to cover its expenses in carrying out its functions.

3

The fees payable by registered societies will vary from one financial year to another and will reflect the FSA's funding requirement for the registrant-only fee block.

4

For periodic fees, the key components of the fee mechanism are:

(1)

a funding requirement derived from:

(a)

the FSA’s financial management and reporting framework;

(b)

the FSA’s budget;

(c)

adjustments, as appropriate, for audited variances between budgeted and actual expenditure in the previous accounting year and reserves movements (in accordance with FSA’s reserves policy);

(2)

fee blocks, which are broad groupings of fee payers offering similar products and services and presenting broadly similar risks to the FSA’s regulatory objectives;

(3)

a costing system to allocate an appropriate part of the funding requirement to each fee block; and

(4)

tariff bases, which, when combined with fee tariffs, allow the calculation of fees.

(5)

The FSA defines fee blocks so that they will depend, for the most part, upon the regulated activities included in the permission held by firms, with a separate fee block for mutual societies which do not conduct regulated activities (registrants). By basing fee blocks on categories of business, the FSA aims to minimise cross-sector subsidies. The funding requirement for the registrant-only fee block will accordingly reflect only the cost of the registration function plus a share of corporate overheads. It will not include any indirect regulatory overheads.

Recovery of fees

(6)

Paragraph 17(4) of Schedule 1 to the Act permits the FSA to recover fees as a debt owed to the FSA and the FSA will consider court action for recovery through the civil courts.