FEES Fees Manual

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FEES 1

Fees Manual

FEES 1.1

Application and Purpose

  • 01/01/2006

FEES 1.1.1

handbook-guidance
FEES applies to all persons required to pay a fee or levy under a provision of the Handbook. The purpose of this chapter is to set out to whom the rules and guidance in FEES apply. FEES 2 (General Provisions) contains general provisions which may apply to any type of fee payer. FEES 3 (Application, Notification and Vetting Fees) covers one-off fees payable on a particular event for example various application fees (including those in relation to authorisation, variation of Part IV permission, listing and the Basel Capital Accord) and fees relating to certain notifications and document vetting requests. FEES 4 (Periodic fees) covers all periodic fees and transaction reporting fees. FEES 5 (Financial Ombudsman Service Funding) relates to FOS levies and case fees and FEES 6 (Financial Services Compensation Scheme Funding) relates to the FSCS levy.

Application

FEES 1.1.2

handbook-rule

This manual applies in the following way:

  1. (1) FEES 1, 2 and 3 apply to:
    1. (a) every applicant for Part IV permission (including an incoming firm applying for top-up permission);
    2. (b) every Treaty firm that wishes to exercise a Treaty right to qualify for authorisation under Schedule 4 to the Act (Treaty rights), except those providing cross border services only, in respect of regulated activities for which it does not have an EEA right;
    3. (c) every applicant for a certificate under article 54 of the Regulated Activities Order;
    4. (d) every applicant for an authorisation order for, or for recognition of, a collective investment scheme;
    5. (e) every operator of a scheme making a notification under section 264 or section 270 of the Act;
    6. (f) every person seeking to become a designated professional body;
    7. (g) every applicant for recognition as a recognised body under Part XVIII of the Act (Recognised investment exchanges and clearing houses);
    8. (h) every applicant for listing (under the listing rules);
    9. (i) every applicant for approval as a sponsor (under the listing rules);
    10. (j) every issuer (under the listing rules) of tranches from debt issuance programmes and securitised derivative tranches;
    11. (k) every issuer (under the listing rules) involved in specific events or transactions during the year where documentation is subject to transaction vetting by the FSA;
    12. (l) under the prospectus rules every issuer, offeror or person requesting approval or vetting of the documents arising in relation to specific events or transactions that it might be involved in during the year;
    13. (m) every applicant to be listed as a designated investment exchange;
    14. (n) every firm applying for variation of its Part IV permission; and
    15. (o) every firm applying for or being concerned in an application for permission to use an advanced prudential calculation approach or guidance on the availability of such a permission (including any future proposed amendments to those approaches).
  2. (2) FEES 1, 2 and 4 apply to:
    1. (a) every firm (except an ICVC or UCITS qualifier);
    2. (b) every manager of an authorised unit trust;
    3. (c) every ACD of an ICVC;
    4. (d) every person who, under the constitution or founding arrangements of a recognised scheme, is responsible for the management of the property held for or within the scheme;
    5. (e) every designated professional body;
    6. (f) every recognised body;
    7. (g) under the Listing Rules every issuer of shares, depositary receipts and securitised derivatives;
    8. (h) under the Listing Rules every sponsor; and
    9. (i) under the Disclosure Rules and Transparency Rules every issuer of shares, depositary receipts and securitised derivatives.
  3. (3) FEES 1, 2 and 5 apply to:
    1. (a) every firm which is subject to the Compulsory Jurisdiction of the Financial Ombudsman Service; and
    2. (b) every other person who is subject to the Compulsory Jurisdiction in relation to relevant complaints.
  4. (4) FEES 1, 2 and 6 apply to:
    1. (a) every participant firm;
    2. (b) the FSCS; and
    3. (c) the Society.

FEES 1.1.3

handbook-guidance
The relevant provisions of FEES 5 and FEES 2 are applied to VJ participants by the standard terms (see DISP 4).

Purpose

FEES 1.1.4

handbook-guidance
The purpose of this manual is to set out the fees applying to the persons set out in FEES 1.

Export chapter as

FEES 2

General Provisions

FEES 2.1

Introduction

  • 01/01/2006

Application

FEES 2.1.1

handbook-rule
This chapter applies to every person who is required to pay a fee or share of a levy to the FSA, FOS Ltd or FSCS, as the case may be, by a provision of the Handbook.

FEES 2.1.2

handbook-rule
FEES 2.2.1R does not apply in respect of any fee payable under FEES 3 (Application, notification and vetting fees).

FEES 2.1.3

handbook-guidance
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

FEES 2.1.4

handbook-guidance
The purpose of this chapter is to set out the general provisions applicable to those who are required to pay fees or levies to FSA, case fees to FOS Ltd or a share of the FSCS levy.

FEES 2.1.5

handbook-guidance

Paragraph 17 of Schedule 1 and section 99 to the Act enable the FSA to charge fees to cover its costs and expenses in carrying out its functions. The corresponding provisions for the FSCS levy and FOS levies and case fees are set out in FEES 6.1, and FEES 5.2 respectively.

FEES 2.1.6

handbook-guidance

The FSA fees payable will vary from one financial year to another, and will reflect the FSA's funding 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 FSA to undertake its statutory functions.

FEES 2.1.7

handbook-guidance

The key components of the FSA fee mechanism (excluding the FSCS levy and FOS levy and case fees, which are dealt with in FEES 5 and FEES 6) are:

  1. (1) a funding requirement derived from:
    1. (a) the FSA's financial management and reporting framework;
    2. (b) the FSA's budget; and
    3. (c) adjustments for audited variances between budgeted and actual expenditure in the previous accounting year, and reserves movements (in accordance with the FSA's reserves policy);
  2. (2) mechanisms for applying penalties received during previous financial years for the benefit of fee payers;
  3. (3) 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;
  4. (4) a costing system to allocate an appropriate part of the funding requirement to each fee-block; and
  5. (5) tariff bases, which, when combined with fee tariffs, allow the calculation of fees.

FEES 2.1.8

handbook-guidance
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).

FEES 2.1.9

handbook-guidance
By basing fee-blocks on categories of business, the FSA 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.

FEES 2.1.10

handbook-guidance
Paragraph 17(2) of Schedule 1 and section 99(3) to the Act prohibit the FSA from taking account of penalties received when setting its periodic and other fees. Accordingly periodic fees are specified without reference to the penalties received. However, the FSA normally expects to allocate those penalties to the fee-blocks within which the penalty payers fall, by way of a deduction from the periodic fee. Any deductions of this sort are set out in the relevant fees provisions or will be notified to the fee payer at the relevant time.
  • 01/01/2006

FEES 2.2

Late Payments and Recovery of Unpaid Fees

  • 01/01/2006

Late Payments

FEES 2.2.1

handbook-rule

If a person does not pay the total amount of a periodic fee (including fees relating to transaction reports to the FSA using the FSA's Transaction Reporting System (see SUP 17)), FOS levy or case fee, or share of the FSCS levy, before the end of the date on which it is due, under the relevant provision in FEES 4, 5, or 6, that person must pay an additional amount as follows:

  1. (1) if the fee was not paid in full before the end of the due date, an administrative fee of £250; plus
  2. (2) interest on any unpaid part of the fee at the rate of 5% per annum above the Bank of England's repo rate from time to time in force, accruing on a daily basis from the date on which the amount concerned became due.

FEES 2.2.2

handbook-guidance
The FSA, (for periodic fees, FOS and FSCS levies), FOS Ltd (for FOS case fees), expect to issue invoices at least 30 days before the date on which the relevant amounts fall due. FOS case fees are invoiced on a monthly basis. Accordingly it will generally be the case that a person will have at least 30 days from the issue of the invoice before an administrative fee becomes payable.

Recovery of Fees

FEES 2.2.3

handbook-guidance

Paragraph 17(4) of Schedule 1 and section 99(5) to the Act permit the FSA to recover fees (and, where relevant, FOS levies), and section 213(6) permits the FSCS to recover shares of the FSCS levy payable, as a debt owed to the FSA and FSCS respectively, and the FSA and FSCS, as relevant, will consider taking action for recovery (including interest) through the civil courts. Also, the FOS Ltd (in respect of case fees) may take steps to recover any money owed to it (including interest).

FEES 2.2.4

handbook-guidance

In addition, the FSA may be entitled to take regulatory action in relation to the non-payment of fees and FOS levies. FSA may also take regulatory action in relation to the non-payment of FOS case fees or share of the FSCS levy, after reference of the matter to FSA by FOS Ltd or FSCS respectively. What action (if any) that is taken by the FSA will be decided upon in the light of the particular circumstances of the case.

FEES 2.3

Relieving Provisions

  • 01/01/2006

Remission of Fees and levies

FEES 2.3.1

handbook-rule
If it appears to the FSA, the FSCS (in relation to any FSCS levy only) or FOS Ltd (in relation to any FOS case fee only), that in the exceptional circumstances of a particular case, the payment of any fee, FSCS levy or FOS levy would be inequitable, the FSA, the FSCS or FOS Ltd, as relevant, may (unless FEES 2.3.2B R applies) reduce or remit all or part of the fee or levy in question which would otherwise be payable.

FEES 2.3.2

handbook-rule
If it appears to the FSA, the FSCS (in relation to any FSCS levy only) or FOS Ltd (in relation to any FOS case fee only), that in the exceptional circumstances of a particular case to which FEES 2.3.1R does not apply, the retention by the FSA, the FSCS, or FOS Ltd, as relevant, of a fee, FSCS levy or FOS levy which has been paid would be inequitable, the FSA, the FSCS or FOS Ltd, may (unless FEES 2.3.2B R applies) refund all or part of that fee or levy.

FEES 2.3.2A

handbook-guidance
A poor estimate or forecast by a fee or levy payer, when providing information relevant to an applicable tariff base, is unlikely, of itself, to amount to an exceptional circumstance for the purposes of FEES 2.3.1 R or FEES 2.3.2 R. By contrast, a mistake of fact or law by a fee or levy payer may give rise to such a claim.

FEES 2.3.2B

handbook-rule
The FSA or the FSCS may not consider a claim under FEES 2.3.1 R and/or FEES 2.3.2 R to reduce, remit or refund any overpaid amounts paid by a fee or levy payer in respect of a particular period, due to a mistake of fact or law by the fee or levy payer, if the claim is made by the fee or levy payer more than 2 years after the beginning of the period to which the overpayment relates.

Export chapter as

FEES 3

Application, Notification and Vetting Fees

FEES 3.1

Introduction

  • 01/01/2006

Application

FEES 3.1.1

handbook-rule
This chapter applies to every person set out in FEES 1.1.2R (1).

FEES 3.1.2

handbook-guidance
This chapter does not apply to an EEA firm that wishes to exercise an EEA right.

Purpose

FEES 3.1.3

handbook-guidance
The purpose of this chapter is to set out the FSA fee paying requirements on the persons set out in FEES 1.1.2R (1). The FSA's power to charge in respect of guidance regarding the Basel Capital Accord is derived from section 157(4)(c) of the Act.

FEES 3.1.4

handbook-guidance
Most of the detail of what fees are payable by the persons referred to in FEES 3.1.3 G is set out in FEES 3 Annex 1 - FEES 3 Annex 6.

FEES 3.1.5

handbook-guidance
  1. (1) The rates set for authorisation fees represent an appropriate proportion of the costs of the FSA in processing the application or exercise of Treaty rights.
  2. (2) The fees for collective investment schemes reflect the estimated costs to the FSA of assessing applications and notifications. The level of fees payable in respect of an application or a notification will vary depending upon the provision of the Act under which it is made. This fee is adjusted when the scheme concerned is an umbrella scheme.
  3. (3) Application fees for recognised bodies are calculated from a tariff structure intended to reflect the estimated cost of processing an application of that type and complexity.

FEES 3.1.6

handbook-guidance
Applications for Part IV permission (and exercises of Treaty rights) are categorised by the FSA for the purpose of fee raising as complex, moderately complex and straightforward as identified in FEES 3 Annex 1. This differentiation is based on the permitted activities sought and does not reflect the FSA's risk assessment of the applicant (or Treaty firm).

FEES 3.1.7

handbook-guidance
A potential applicant for Part IV permission (or Treaty firm) has the opportunity to discuss its proposed application (or exercise of Treaty rights) with the FSA before submitting it formally. (For more information, contact the Firm Contact Centre (020 7066 3954) or visit the FSA website How do I get authorised: http://www.fsa.gov.uk/Pages/Doing/how/index.shtml.) If an applicant for Part IV permission (or Treaty firm) does so, the FSA will be able to use that dialogue to make an initial assessment of the fee categorisation and therefore indicate the authorisation fee that should be paid.

FEES 3.1.8

handbook-guidance
See the FSA website How do I get authorised: http://www.fsa.gov.uk/Pages/Doing/how/index.shtml in relation to the procedures for making applications for Part IV permission and SUP 13A for procedures for the exercise of Treaty rights by Treaty firms.

FEES 3.2

Obligation to pay fees

  • 01/01/2006

General

FEES 3.2.1

handbook-rule

A person in column (1) of the table in FEES 3.2.7 R as the relevant fee payer for a particular activity must pay to the FSA a fee for each application or request for vetting or admission approval made, or notification or notice of exercise of a Treaty right given, as is applicable to it, as set out or calculated in accordance with the provisions referred to in column (2) of that table:

  1. (1) in full and without deduction; and
  2. (2) on or before the date given in column (3) of that table.

FEES 3.2.2

handbook-guidance
If an application for a Part IV permission (or exercise of a Treaty right) falls within more than one category set out in FEES 3 Annex 1, only one fee is payable. That fee is the one for the category to which the highest fee tariff applies.

Method of payment

FEES 3.2.3

handbook-rule
  1. (1) Unless (2) applies, the sum payable under FEES 3.2.1 R must be paid by bankers draft, cheque or other payable order.
  2. (2) FSA does not specify a method of payment for a person seeking to become a recognised body or a designated professional body or to be added to the list of designated investment exchanges.

FEES 3.2.4

handbook-guidance
The FSA expects that a person seeking to become a recognised body or a designated professional body or to be added to the list of designated investment exchanges will generally pay their respective fees by electronic credit transfer.

FEES 3.2.5

handbook-guidance
  1. (1) The appropriate authorisation fee is an integral part of an application for, or an application for a variation of, a Part IV permission Any application received by the FSA without the accompanying appropriate fee, in full and without deduction (see FEES 3.2.1 R), will not be treated as an application made, incomplete or otherwise, in accordance with section 51(3)(a) or section 44, of the Act. Where this is the case, the FSA will contact the applicant to point out that the application cannot be progressed until the appropriate fee has been received. In the event that the appropriate authorisation fee, in full and without deduction, is not forthcoming, the application will be returned to the applicant and no application will have been made.
  2. (2) With the exception of persons seeking to become a designated professional body, all applications, notifications, requests for vetting or admission approval will be treated as incomplete until the relevant fee is fully paid and the FSA will not consider an application, notification, request for vetting or admission approval until the relevant fee is fully paid. Persons seeking to become a designated professional body have 30 days after the designation order is made to pay the relevant fee.

FEES 3.2.6

handbook-guidance
Fees paid under this chapter are not refundable.

FEES 3.2.7

handbook-rule

Table of application, notification and vetting fees

FEES 3 Annex 1

Authorisation fees payable

  • 01/01/2006

handbook-rule
Part 1 - Authorisation fees payable R Part 2 - Complexity Groupings Straightforward Cases R
Moderately Complex Cases R
Complex Cases R
Part 4 - Authorisation Fees for Treaty Firms R
Part 5 - Activity Groupings R
Part 6 - Change of legal status

FEES 3 Annex 2

Application and notification fees payable in relation to collective investment schemes

  • 01/01/2006

handbook-rule

FEES 3 Annex 3

Application fees payable in connection with Recognised Investment Exchanges and Recognised Clearing Houses

handbook-rule

FEES 3 Annex 4

Application fees in relation to listing rules

handbook-rule
Part 1 Part 2

FEES 3 Annex 5

Document vetting and approval fees in relation to listing and prospectus rules

  • 01/01/2006

FEES 3 Annex 6

Fees payable for a permission or guidance on its availability in connection with the Basel Capital Accord

handbook-rule
Part 1 Fees payable other than in relation to the counterparty credit risk internal model method. Part 2
Fees payable in relation to the counterparty credit risk internal model method.
54,000

Export chapter as

FEES 4

Periodic fees

FEES 4.1

Introduction

  • 01/01/2006

Application

FEES 4.1.1

handbook-rule
This chapter applies to every person set out in FEES 1.1.2R (2).

Purpose

FEES 4.1.2

handbook-guidance
The purpose of this chapter is to set out the requirements on firms and others to pay periodic fees and transaction reporting fees in certain circumstances.

Background

FEES 4.1.3

handbook-guidance
Most of the detail of the periodic fees that are payable by firms is set out in FEES 4 Annexes 1-8. Most of the provisions of the Annexes will vary from one financial year to another. Accordingly fresh FEES 4 Annexes will come into force, following consultation, for each financial year.

FEES 4.1.4

handbook-guidance
  1. (1) The periodic fees for collective investment schemes reflect the estimated costs to the FSA of considering proposals to change regulated collective investment schemes, maintaining up to date records about them, and related policy work.
  2. (2) The provision of the Transaction Reporting System facilities for firms reporting transactions under SUP 17 incurs costs to the FSA. These costs depend upon the amount the facility is used. Accordingly the income which the FSA receives from these transactions reporting fees will be set and accounted for separately from the fee-block tariffs, and are set out in FEES 4 Annex 3.

FEES 4.1.5

handbook-guidance
The Society of Lloyd's, which has permission under section 315(2) of the Act (The Society: authorisation and permission), has its own fee block.

FEES 4.1.6

handbook-guidance
The FSA will allocate penalties received for the benefit of relevant fee payers by way of a permitted deduction specified in FEES 4 Annex 2, or in the case of listed issuers, as notified to issuers annually, for the relevant year.

FEES 4.1.7

handbook-guidance
In the case of periodic fees for firms, fees are calculated individually for each firm, but they may be paid on a group basis, if the group so wishes.

FEES 4.2

Obligation to pay periodic fees

  • 01/01/2006

General

FEES 4.2.1

handbook-rule

A person shown in column (1) of the table in FEES 4.2.11 R as the relevant fee payer must pay each periodic fee applicable to it, calculated in accordance with the provisions referred to in column (2) of that table, as adjusted by any relevant provision in this chapter:

  1. (1) in full and without deduction (unless permitted or required by a provision in FEES); and
  2. (2) on or before the date given in column (3) of that table, unless FEES 4.2.10 R applies.

FEES 4.2.2

handbook-guidance
  1. (1) A relevant fee payer will be required to pay a periodic fee for every year during which they have the status in column 1 of the table in FEES 4.2.11 R (or in relation to collective investment schemes, for every year during which it is a regulated collective investment scheme) subject to any reductions or exemptions applicable under this chapter. If a person is the relevant fee payer for more than one status listed in column 1 of the table in FEES 4.2.11 R (or in relation to collective investment schemes, the relevant fee payer for more than one regulated collective investment scheme) he will be required to pay a fee in relation to each.
  2. (2) A recognised body may also have obligations to pay fees to the FSA under other rules arising from legislation other than the Act. For example a recognised body may have an obligation to pay a fee as an approved operator of a relevant system under the Uncertificated Securities Regulations 1995 (SI 1995/3272).

FEES 4.2.3

handbook-guidance
The FSA will issue invoices to firms and other fee payers and expects to do so at least 30 days before the dates on which payments fall due under FEES 4.2.1 R.

Method of payment

FEES 4.2.4

handbook-rule
  1. (1) Unless (2) applies, a periodic fee must be paid using either direct debit, credit transfer (BACS/CHAPS), cheque, switch or by credit card (Visa/Mastercard only). Any payment by permitted credit card must include an additional 2% of the sum paid.
  2. (2) The FSA does not specify a method of payment for a recognised body or a designated professional body.

FEES 4.2.5

handbook-guidance
The FSA expects a recognised body or a designated professional body will generally pay their respective fees by electronic credit transfer.
  • 01/01/2006

Modifications for persons becoming subject to periodic fees during the course of a financial year

FEES 4.2.6

handbook-rule
  1. (1) Unless (2) applies, if the event, as described in column 4 of the table in FEES 4.2.11 R, giving rise to, or giving rise to an increase in, the fee payable in FEES 4.2.1 R, occurs on or after 1 July of the relevant financial year, the periodic fee required under FEES 4.2.1 R is modified for:
    1. (a) firms (other than ICVCs and UCITS qualifiers) in accordance with FEES 4.2.7 R and FEES 4.2.8 R;
    2. (b) for all other fee payers in column (1) of the table in FEES 4.2.11 R, in accordance with the table below.
  1. (2) For recognised bodies, if the recognition order is made during the course of the relevant financial year, the periodic fee required is set out in Column (4) of the table in FEES 4.2.11 R.

FEES 4.2.7

handbook-rule

A firm (other than an ICVC or UCITS qualifier) which becomes authorised, or whose permission is extended, during the course of the financial year must pay a fee which is calculated by:

  1. (1) identifying each of the tariffs set out in Part 1 of FEES 4 Annex 2R for the relevant financial year that apply to the firm only after the permission is received or extended, but ignoring:
    1. (a) the A.13 activity group if, before the variation, the A.12 activity group applied to the firm's business; or
    2. (b) the A.12 activity group if, before the variation, the A.13 activity group applied to the firm's business;
  2. (2) calculating the amount for each of those tariffs which is the higher of:
    1. (a) the minimum fee specified for the tariff; and
    2. (b) the result of applying the tariff to the projected valuation, for its first year (as provided to the FSA in the course of the firm's application), of the business to which the tariff relates;
  3. (3) adding together the amounts calculated under (2); and
  4. (4) modifying the result as indicated by the table in FEES 4.2.6 R.

FEES 4.2.7A

handbook-guidance
Projected valuations for a firm's first year will be collected for the 12 month period beginning with the date a firm becomes authorised, or the date permission is extended. That information will be used to calculate the periodic fee for the remainder of the financial year in which the firm was authorised or its permission was extended (adjusted in accordance with FEES 4.2.7 R) and to calculate the periodic fee for the following financial year.

FEES 4.2.8

handbook-rule
In relation to an incoming EEA firm or an incoming Treaty firm the modification provisions of FEES 4.2.7 R apply only in relation to the relevant regulated activities of the firm, which are passported activities or Treaty activities and which are carried on in the United Kingdom, and which are not provided on a cross border services basis.

Fee payers ceasing to hold relevant status or reducing the scope of their permission after start of relevant period

FEES 4.2.9

handbook-guidance

The FSA will not refund periodic fees if, after the start of the period to which they relate:

  1. (1) a fee payer ceases to have the status set out in column (1) of the table in FEES 4.2.11 R; or
  2. (2) a firm reduces its permission so that it then falls out of the fee-block previously applied to it,

(but see FEES 2.3 (Relieving Provisions) and FEES 4.3.13 R (Firms Applying to Cancel or Vary Permission Before Start of Period)).

Extension of Time

FEES 4.2.10

handbook-rule

A person need not pay a periodic fee on the date on which it is due under the relevant provision in FEES 4.2.1 R, if:

  1. (1) that date falls during a period during which circumstances of the sort set out in GEN 1.3.2 R (Emergencies) exist, and that person has reasonable grounds to believe that those circumstances impair its ability to pay the fee, in which case he must pay it on or before the fifth business day after the end of that period; or
  2. (2) unless FEES 4.3.6R (3) or FEES 4.3.6R (4) (Time and method for payment) applies, that date would otherwise fall on or before the 30th day after the date on which the FSA has sent written notification to that person of the fee payable on that date, in which case he must pay on or before the 30th day after the date on which the FSA sends the notification.

FEES 4.2.11

handbook-rule

Table of periodic fees

FEES 4.3

Periodic fee payable by firms (other than ICVCs and UCITS qualifiers)

FEES 4.3.1

handbook-rule

The periodic fee payable by a firm (except an ICVC or a UCITS qualifier) is:

  1. (1) each periodic fee applicable to it calculated in accordance with FEES 4.3.3 R, using information obtained in accordance with FEES 4.4; less
  2. (2) any deductions from the periodic fee specified in Part 2 of FEES 4 Annex 2.

FEES 4.3.2

handbook-guidance
  1. (1) The amount payable by each firm will depend upon the category (or categories) of regulated activities it is engaged in (fee-blocks), and on the amount of business it conducts in each category (tariff base). The fee-blocks and tariffs are identified in in respect of the FCA and in respect of the PRA FEES 4 Annex 1, while FEES 4 Annex 2 sets out the tariff rates for the relevant financial year.
  2. (2) Incoming EEA firms, and incoming Treaty firms receive a discount to reflect the reduced scope of the FSA's responsibilities in respect of them. The level of the discount varies from fee-block to fee-block, according to the division of responsibilities between the FSA and Home state regulators for firms in each fee-block (see FEES 4.3.11 G and FEES 4.3.12 R ).

Calculation of periodic fee

FEES 4.3.3

handbook-rule

The periodic fee referred to in FEES 4.3.1 R is (except in relation to the Society) calculated as follows:

  1. (1) identify each of the tariffs set out in Part 1 of FEES 4 Annex 2 which apply to the business of the firm for the period specified in that annex;
  2. (2) for each of those tariffs, calculate the sum payable in relation to the business of the firm for that period, applying any minimum fee discount as may be applicable (see FEES 4.3.16 R);
  3. (3) add together the amounts calculated under (2); and
  4. (4) apply any applicable payment charge or discount specified in FEES 4.2.4 R, provided that:
    1. (a) for payment by direct debit, successful collection of the amount due is made at the first attempt by the FSA; or
    2. (b) for payment by credit transfer, the amount due is received by the FSA on or before the due date.

Modification for firms with new or extended permissions

FEES 4.3.4

handbook-guidance
  1. (1) A firm which becomes authorised during the course of a financial year will be required to pay a proportion of the periodic fee which reflects the proportion of the year for which it will have a permission - see FEES 4.2.5 G and FEES 4.2.6 R.
  2. (2) Similarly a firm which extends its permission so that its business then falls within additional fee blocks will be required to pay a further periodic fee under this section for those additional fee blocks, but discounted to reflect the proportion of the year for which the firm has the extended permission - see FEES 4.2.6 R and FEES 4.2.7 R.
  3. (3) These provisions apply (with some changes) to incoming EEA firms and incoming Treaty firms.

Amount payable by the Society of Lloyd's

FEES 4.3.5

handbook-rule
The periodic fee referred to in FEES 4.3.1 R in relation to the Society is specified against its name in FEES 4 Annex 2.

Time of payment

FEES 4.3.6

handbook-rule
  1. (1) If the firm's, periodic fee for the previous financial year was at least £50,000, the firm must pay:
    1. (a) an amount equal to 50% of the periodic fee payable for the previous year, by 30 April in the financial year to which the sum due under FEES 4.2.1 R relates; and
    2. (b) the balance of the periodic fee due for the current financial year by 1 September in the financial year to which that sum relates.
  2. (2) If the firm's, periodic fee for the previous financial year was less than £50,000, the firm must pay the periodic fee due in full by 1 August or, if later, within 30 days of the date of the invoice in the financial year to which that sum relates.
  3. (3) f a firm has applied to cancel its Part IV permission in the way set out in SUP 6.4.5 D (Cancellation of permission), then (1) and (2) do not apply but it must pay the total amount due when the application is made.
  4. (4) If the FSA has exercised its own-initiative powers to cancel a firm's Part IV permission in the way set out in EG 8 (Variation and cancellation of permission on the FSA's own initiative and intervention against incoming firms), then (1) and (2) do not apply but the firm must pay the total amount due immediately before the cancellation becomes effective.
  5. (5) Paragraphs (1) and (2) do not apply to any Solvency 2 fee (as defined in Part 1 of FEES 4 Annex 2) and such fee is not taken into account for the purposes of the split in (1). Instead any Solvency 2 fee is payable on the date specified in (1)(a) or (2) (depending on which applies to the rest of its periodic fee) or any earlier date required by (3) or (4).

Groups of firms

FEES 4.3.7

handbook-rule

A firm which is a member of a group may pay all of the amounts due from other firms in the same group under FEES 4.2.1 R, if:

  1. (1) it notifies the FSA in writing of the name of each other firm within the group for which it will pay; and
  2. (2) it pays the fees, in accordance with this chapter, as a single amount as if that were the amount required from the firm under FEES 4.2.1 R.

FEES 4.3.8

handbook-guidance
A notification under FEES 4.3.7R (1) should be made in accordance with SUP 15.7 (Form and method of notification).

FEES 4.3.9

handbook-guidance

If the payment made does not satisfy in full the periodic fees payable by all of the members of the group notified to the FSA under FEES 4.3.7 R, the FSA will apply the sum received among the firms which have been identified in the notification given under FEES 4.3.7R (1) in proportion to the amounts due from them. Each firm will remain responsible for the payment of the outstanding balance attributable to it.

FEES 4.3.10

handbook-guidance
If a firm pays its fees through an agent outside the scope of FEES 4.3.7 R, the firm is responsible for ensuring that the FSA is informed that the sum being paid is for that firm's periodic fees.

Incoming EEA firms and incoming Treaty firms

FEES 4.3.11

handbook-guidance
The FSA recognises that its responsibilities in respect of an incoming EEA firm or of an incoming Treaty firm are reduced compared with a firm which is incorporated in the United Kingdom. Accordingly the periodic fees which would otherwise be applicable to incoming EEA firms and incoming Treaty firms are reduced.

FEES 4.3.12

handbook-rule

For an incoming EEA firm or an incoming Treaty firm, the calculation required by FEES 4.3.3 R is modified as follows:

  1. (1) the tariffs set out in Part 1 of FEES 4 Annex 2 are applied only to the regulated activities of the firm which are carried on in the United Kingdom; and
  2. (2) those tariffs are modified in accordance with Part 3 of and, if applicable, Part 3 of FEES 4 Annex 2.

Firms Applying to Cancel or Vary Permission Before Start of Period

FEES 4.3.13

handbook-rule
  1. (1) If:
    1. (a) a firm makes an application to vary its permission (by reducing its scope), or cancel it, in the way set out in SUP 6.3.15 D (3) (Variation of permission) and SUP 6.4.5 D (Cancellation of permission); an issuer makes an application for de-listing; or a sponsor notifies FSA of its intention to be removed from the list of approved sponsors; and
    2. (b) the firm, issuer or sponsor makes the application or notification referred to in (a) before the start of the period to which the fee relates;
  2. FEES 4.2.1 R applies to the firm as if the relevant variation or cancellation of the firm's permission, de-listing or removal from the list of approved sponsors, took effect immediately before the start of the period to which the fee relates.
  3. (2) But (1) does not apply if, due to the continuing nature of the business, the variation, cancellation, de-listing or removal is not to take effect within three months of the start of the period to which the fee relates.

FEES 4.3.14

handbook-guidance
Where a firm has applied to cancel its Part IV permission, or the FSA has exercised its own-initiative powers to cancel a firm's Part IV permission, the due dates for payment of periodic fees are modified by FEES 4.3.6R (3) and FEES 4.3.6R (4) respectively.

Firms acquiring businesses from other firms

FEES 4.3.15

handbook-rule
  1. (1) This rule applies if:
    1. (a) a firm (A) acquires all or a part of the business of another firm (B), whether by merger, acquisition of goodwill or otherwise, in relation to which a periodic fee would have been payable by B, unless no periodic fee was payable by A in the financial year that the business was acquired from B; or
    2. (b) A became authorised as a result of B's simple change of legal status (as defined in FEES 3 Annex 1 Part 6).
  2. (2) If, before the date on which A acquires the business, B had paid any periodic fee payable for the period in which the acquisition occurred, FEES 4.2.6 R to FEES 4.2.7 R do not apply to A in relation to the business acquired from B.
  3. (3) If the acquisition occurs after the valuation date applicable to the business (as set out in FEES 4 Annex 1) which A acquired from B, for the period following that in which the acquisition occurred, FEES 4.2.1 R applies to A, in relation to that following period, as if the acquisition had occurred immediately before the relevant valuation date.

Minimum fee discount

FEES 4.3.16

handbook-rule
  1. (1) A firm (other than a firm in (2) or a credit union) in more than one fee block must pay at least 50% of the total minimum fee payable in any fee block in which it is a minimum fee payer. [deleted]
  2. (2) A firm (other than a credit union) liable to pay only minimum fees in each fee block it is in must pay 100% of the highest total minimum fee payable within any one fee block and must pay at least 50% of the total minimum fee payable in any other fee blocks in which it is a minimum fee payer. [deleted]
  3. (3) A credit union in more than one fee block must pay at least 50% of the total minimum fee payable in any fee block, other than fee block A.1, in which they are a minimum fee payer. [deleted]

FEES 4.4

Information on which Fees are calculated

  • 01/01/2006

FEES 4.4.1

handbook-rule
A firm (other than the Society) must notify to the FSA the value (as at the valuation date specified in Part 3 of FEES 4 Annex 1) of each element of business on which the periodic fee payable by the firm is to be calculated.

FEES 4.4.2

handbook-rule
A firm (other than the Society) must send to the FSA in writing the information required under FEES 4.4.1 R as soon as reasonably practicable, and in any event within two months, after the date specified as the valuation date in Part 3 of FEES 4 Annex 1.

FEES 4.4.3

handbook-rule
To the extent that a firm has provided the information required by this section to the FSA as part of its compliance with another provision of the Handbook, it is deemed to have complied with the provisions of this section.

FEES 4.4.4

handbook-guidance
In most cases a firm will provide the information required by this section as part of its compliance with the provisions of SUP. To the extent that the FSA does not obtain sufficient, or sufficiently detailed, information it may seek this by using its general information gathering powers (see SUP 2 (Information gathering by the FSA on its own initiative)).

FEES 4.4.5

handbook-rule
For an incoming EEA firm or an incoming Treaty firm, the information required under FEES 4.4 is limited to the regulated activities of the firm which are carried on in the United Kingdom, except those provided on a cross border services basis.

FEES 4 Annex 1

Activity groups, tariff bases and valuation dates applicable

  • 01/01/2006

handbook-rule

FEES 4 Annex 2

Fee tariff rates, permitted deductions and EEA/Treaty firm modifications for the period from 1 April 2008 to 31 March 2009

handbook-rule
Part 1
This table shows the tariff rates applicable to each fee block Part 2
This table shows the permitted deductions that apply

FEES 4 Annex 3

Transaction reporting fees

  • 01/01/2006

Transaction reporting fees for the period from 1 April 2008 to 31 March 2009

handbook-rule
This table shows the fees payable for firms using the FSA's Transaction Reporting System.

FEES 4 Annex 4

Periodic fees in relation to collective investment schemes payable for the period 1 April 2008 to 31 March 2009

handbook-rule
Part 1 - Periodic fees payable Fees are charged according to the number of funds or sub-funds operated by a firm as at 31 March 2008. Where a new collective investment scheme becomes authorised during a year, fees are charged according to the number of funds or sub-funds operated by a firm as at the date of authorisation. Where more than one fund or sub-fund is operated the number of funds (not including the umbrella or parent fund) produces a 'fund factor' in accordance with the table above which is then applied to a basic fee to produce one total fee per operator. Fund factors are applied per operator rather than per scheme so that the fees relate to the number of funds rather than the number of schemes. This means that, for example, an authorised fund manager of three schemes pays the same as an operator or authorised fund manager of one scheme with three sub-funds (as only the sub-funds are counted).
Schemes set up under section 264 of the Act are charged according to the number of funds or sub-funds which a firm is operating and marketing into the UK as at 31 March immediately before the start of the period to which the fee applies. For example, for 2008/09 fees a reference to 31 March means 31 March 2008.

FEES 4 Annex 5

Periodic fees for designated professional bodies payable in relation to the period 1 April 2008 to 31 March 2009

handbook-rule
Table. Fees payable by Designated Professional BodiesNotes

(1) The FSA register includes details of exempt professional firms carrying out insurance mediation activity.

FEES 4 Annex 6

Periodic fees for recognised investment exchanges and recognised clearing houses payable in relation to the period 1 April 2008 to 31 March 2009

handbook-rule
Part 1 - Periodic fees for UK recognised bodies Part 2 - Periodic fees for overseas recognised bodies

FEES 4 Annex 7

Annex 7, Periodic fees in relation to the Listing Rules for the period 1 April 2008 to 31 March 2009

handbook-rule
Table 1
Annual fees for issuers of securitised derivatives, depositary receipts and global depositary receipts
Table 2
Tiered annual fees for all other issuers

FEES 4 Annex 8

Periodic fees in relation to the disclosure rules and transparency rules for the period 1 April 2008 to 31 March 2009

handbook-rule
Table 1
Annual fees for non-listed issuers of securitised derivatives, depositary receipts and global depositary receipts
Table 2

FEES 4 Annex 9

Periodic fees in respect of securitised derivatives for the period from 1 April 2008 to 31 March 2009

handbook-rule


Part 1

This table shows the fee amount applicable to firms and market operators in respect of certain securitised derivatives.

For the purposes of this Annex relevant contracts are all transactions entered into by firms in securitised derivatives entered into on or settled through LIFFE or Eurex Clearing AG, and the relevant period is 1 January 2007 to 31 December 2007 inclusive.

The fee shown in the table below for firms (but not for market operators) will be subject to a deduction of 1.4%, as if that fee were a periodic fee charged under FEES 4.3.3 R, and the deduction were a deduction set out in Part 2 of FEES 4 Annex 2 R.

Export chapter as

FEES 5

Financial Ombudsman Service Funding

FEES 5.1

Application and Purpose

  • 01/01/2006

Application

FEES 5.1.1

handbook-rule

This chapter applies to:

  1. (1) every firm which is subject to the Compulsory Jurisdiction and (apart from FEES 5.3, 5.4 and 5.8) every licensee which is subject to the Consumer Credit Jurisdiction of the Financial Ombudsman Service; and
  2. (2) every other person who is subject to the Compulsory Jurisdiction in relation to relevant complaints.

FEES 5.1.2

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

FEES 5.1.3

handbook-guidance

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

  1. (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. (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.
  • 01/01/2006

FEES 5.1.3A

handbook-guidance
References in this chapter to licensees are to be construed, where relevant, as a result of section 226A of the Act, as including persons who were formerly licensees in respect of complaints about acts or omissions which occurred at the time when they were licensees, provided the complaint falls within a description specified in the Consumer Credit Jurisdiction rules in force at the time of the act or omission.
  • 06/04/2007

Exemption

FEES 5.1.4

handbook-rule
A firm which is exempt under DISP 1.1.12 R is also exempt from FEES 5.1 to FEES 5.6.

FEES 5.1.4A

handbook-rule
A firm will only be exempt from FEES 5.7 for any given financial year if it met the conditions in DISP 1.1.12 R on 31 March of the immediately preceding financial year.

FEES 5.1.5

handbook-rule
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.
  • 01/01/2006

FEES 5.1.6

handbook-rule
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.
  • 01/01/2006

Purpose

FEES 5.1.7

handbook-guidance
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 5.1.8

handbook-guidance
This chapter also explains the way that the Consumer Credit Jurisdiction will be funded by a combination of contributions collected by the Office of Fair Trading which are paid to FOS Ltd and case fees invoiced and collected directly by FOS Ltd from licensees.
  • 06/04/2007

FEES 5.2

Introduction

  • 01/01/2006

FEES 5.2.1

handbook-guidance
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, the Consumer Credit Jurisdiction and the Voluntary Jurisdiction.

FEES 5.2.2

handbook-guidance

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

FEES 5.2.2A

handbook-guidance

Section 234A (1) of the Act (Funding by consumer credit licensees etc.) enables FOS Ltd from time to time and with the approval of the FSA to determine a sum which is to be raised by way of contributions under that section to cover the costs of:

  1. (1) the establishment of the Financial Ombudsman Service so far as it relates to the Consumer Credit Jurisdiction;
  2. (2) its operation in relation to the Consumer Credit Jurisdiction; and
  3. (3) a component to cover the costs of collection of the contributions to that sum (collection costs).
  • 06/04/2007

FEES 5.2.2B

handbook-guidance

FOS Ltd must notify the Office of Fair Trading of every determination made under section 234A(1) and the Office of Fair Trading must give a general notice of every determination so notified. The Office of Fair Trading may by general notice impose requirements on

  1. (1) licensees under standard licences which cover to any extent the carrying on of a type of business specified in an order made under section 226A(2)(e) of the Act; or
  2. (2) persons who make applications for:
    1. (a) standard licences covering to any extent business of such a type; or
    2. (b) the renewal of standard licences on terms covering to any extent the carrying on of a business of such a type;

to pay contributions to the Office of Fair Trading for the purpose of raising sums determined by FOS Ltd in accordance with the provisions of section 234A (6) and (7) of the Act.

  • 06/04/2007

FEES 5.2.3

handbook-guidance
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.
  • 01/01/2006

FEES 5.2.3A

handbook-guidance
Paragraph 16C of Schedule 17 to the Act enables FOS Ltd to require licensees subject to the Consumer Credit Jurisdiction and any other respondents to a complaint to pay specified fees to it in respect of complaints closed by the Financial Ombudsman Service.
  • 06/04/2007

FEES 5.2.4

handbook-guidance
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.
  • 01/01/2006

FEES 5.2.5

handbook-guidance
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.
  • 01/01/2006

FEES 5.2.6

handbook-guidance
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).
  • 01/01/2006

FEES 5.2.7

handbook-guidance
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 annex to 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

  • 01/01/2006

FEES 5.3.1

handbook-guidance

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

FEES 5.3.2

handbook-guidance
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.
  • 01/01/2006

FEES 5.3.3

handbook-guidance
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).
  • 01/01/2006

FEES 5.3.4

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

FEES 5.3.5

handbook-guidance
The FSA will specify a minimum levy for firms in each industry block.
  • 01/01/2006

FEES 5.3.6

handbook-rule
A firm must pay to the FSA a general levy towards the costs of operating the Compulsory Jurisdiction of the Financial Ombudsman Service.
  • 01/01/2006

FEES 5.3.7

handbook-guidance
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

handbook-rule

A firm's general levy is calculated as follows:

  1. (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. (2) for each of those tariff bases, calculate the sum payable in relation to the relevant business of the firm for that year;
  3. (3) add together the amounts calculated under (2).

FEES 5.3.9

handbook-rule
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.
  • 01/01/2006

FEES 5.3.10

handbook-rule
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

  • 01/01/2006

FEES 5.4.1

handbook-rule
  1. (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. (2) Paragraph (1) does not apply if the firm pays a general levy on a flat fee basis only.
  3. (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. (4) For the purpose of FEES 5.4.1 R, 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. (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

handbook-guidance
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 DEPP 6.6.1 G to DEPP 6.6.5 G).

FEES 5.4.3

handbook-guidance
SUP 16.3 (General provisions on reporting) contains further rules on the method of submission of reports under FEES 5.4.1 R.
  • 01/01/2006

FEES 5.4.4

handbook-guidance
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 2.7.3R (2), DISP 2.7.6R (12)(a) and DISP 2.7.6R (12)(a); 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

  • 01/01/2006

Standard case fee

FEES 5.5.1

handbook-rule
A firm or licensee 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 or licensee 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

handbook-guidance
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.
  • 01/01/2006

FEES 5.5.2A

handbook-guidance
For the purposes of the Consumer Credit Jurisdiction, the standard case fee, which will be subject to consultation each year, will be calculated by dividing the annual budget for the Consumer Credit Jurisdiction, less the amount to be raised by the sum determined by FOS Ltd under section 234A of the Act, by the estimated number of chargeable cases which the Financial Ombudsman Service expects to close in the relevant financial year.
  • 06/04/2007

FEES 5.5.3

handbook-rule
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.
  • 01/01/2006

FEES 5.5.4

handbook-rule
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

handbook-guidance
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.
  • 01/01/2006

Special case fees: complaints from small businesses

FEES 5.5.6

handbook-rule
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 2.7.3R (2), DISP 2.7.6R (12)(a) and DISP 2.7.6R (12)(a).

Special case fees: firms which cease to be authorised and persons which cease to be licensees

FEES 5.5.7

handbook-rule
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.

FEES 5.5.7A

handbook-rule
DISP 5.5.7R applies to persons which cease to be licensees in the same way as it applies to firms which cease to be authorised.

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

FEES 5.5.8

handbook-rule
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

handbook-guidance
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.
  • 01/01/2006

Special case fees for 2001/02

FEES 5.5.10

handbook-rule
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

handbook-rule
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.
  • 01/01/2006

FEES 5.5.12

handbook-rule
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

handbook-guidance
The relevant provisions of FEES 5.5 will be applied to VJ participants through the standard terms.
  • 01/01/2006

FEES 5.5.14

handbook-guidance
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.
  • 01/01/2006

Case fee exemption

FEES 5.5.15

handbook-rule
Notwithstanding the above, a firm or licensee 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 fourth and subsequent chargeable cases in any financial year.

FEES 5.5.16

handbook-guidance
A case fee exemption provision was first applied in the financial year 1 April 2004 to 31 March 2005. For that financial year only, each authorised firm was invoiced for a standard case fee for the third and subsequent chargeable case received by the Financial Ombudsman Service, subject to the annual levy having been invoiced and paid by the firm within the Financial Ombudsman Services normal credit terms. For the financial year commencing 1 April 2005 and for subsequent financial years, the case fee exemption provision contained in FEES 5.5.15 R applies. This provision is not retrospectively applicable to financial years prior to 1 April 2005.
  • 06/07/2006

FEES 5.6

The supplementary levy

  • 01/01/2006

FEES 5.6.1

handbook-guidance
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).
  • 01/01/2006

FEES 5.6.2

handbook-guidance
The establishment costs will be recovered via the supplementary levy over the first three full financial years of the Financial Ombudsman Service's operation.
  • 01/01/2006

FEES 5.6.3

handbook-guidance
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.
  • 01/01/2006

FEES 5.6.4

handbook-guidance
The supplementary levy will be identified separately from the general levy for the purposes of invoicing firms and VJ participants.
  • 01/01/2006

FEES 5.6.5

handbook-rule
A firm must pay to the FSA a supplementary levy towards the costs of establishing the Financial Ombudsman Service.
  • 01/01/2006

FEES 5.6.6

handbook-rule
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.
  • 01/01/2006

FEES 5.6.7

handbook-guidance
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.
  • 01/01/2006

FEES 5.7

Payment

  • 01/01/2006

FEES 5.7.1

handbook-rule
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

handbook-rule
A firm or licensee 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

handbook-rule
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.
  • 01/01/2006

FEES 5.7.4

handbook-rule
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.
  • 01/01/2006

FEES 5.8

Joining the Financial Ombudsman Service

  • 01/01/2006

FEES 5.8.1

handbook-rule
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

  • 01/01/2006

FEES 5.9.1

handbook-rule
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.
  • 01/01/2006

FEES 5.9.1A

handbook-rule
DISP 5.9.1 R applies to persons ceasing to be licensees part way through a financial year in the same way as it applies to firms which cease to be authorised.

FEES 5.9.2

handbook-guidance
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 5.9.3

handbook-guidance
Licensees will also continue to be liable for any case fees relating to chargeable cases closed by the Financial Ombudsman Service after they cease to be licensees. Licensees 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 they ceased to be licensees. The special case fee will apply to any complaint closed after the end of that year since the licensee will no longer be contributing to any sum determined under section 234A of the Act.
  • 06/04/2007

FEES 5 Annex 1

Annual Fees Payable in Relation to 2008/09

handbook-rule
Introduction: annual budget
1. The annual budget for 2008/09 approved by the FSA is 62.6m.
Part 1: General levy and supplementary levy
2. The total amount expected to be raised through the general levy in 2008/09 will be 17.2m (net of 1.8m to be raised from consumer credit firms.

Part 2: Fee tariffs for general levy and supplementary levy
3. No establishment costs will be raised in 2008/09 by the supplementary levy. Part 3: Case Fees
Table: Standard case fees and special case fees Part 3A: Case fees licencees
Table: Consumer credit jurisdiction - standard case fee
Part 4: VJ participants
Table: Fee tariffs and case fees for VJ participants

Export chapter as

FEES 6

Financial Services Compensation Scheme Funding

FEES 6.1

Application

  • 01/01/2006

FEES 6.1.1

handbook-rule
This chapter applies to:
(1) every participant firm;
(2) the FSCS; and
(3) the Society.

FEES 6.1.2

handbook-guidance

(1) Firms which are not participant firms (such as certain types of incoming EEA firms, service companies and ICVCs) are not required to contribute towards the funding of the compensation scheme.

(2) Although a member is a participant firm for the purposes of most provisions of COMP, a member is excluded from the definition of participant firm for the purposes of FEES 6 (see definition of participant firm in Glossary). This is because the fees levied in relation to the carrying on of insurance market activities by members will be imposed on Society rather than individually on each member (see FEES 6.3.24 R).

Purpose

FEES 6.1.3

handbook-guidance
The purpose of this chapter is to set out the requirements on participant firms to pay levies imposed by the FSCS to provide funding for its functions.

General structure

FEES 6.1.4

handbook-guidance
Section 213(3)(b) of the Act requires the FSA to make rules to enable the FSCS to impose levies on authorised persons in order to meet its expenses. These expenses include in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks.

FEES 6.1.5

handbook-guidance
The FSCS may impose two types of levy: a management expenses levy, and a compensation costs levy. The FSCS has discretion as to the timing of the levies imposed.

FEES 6.1.6

handbook-guidance
In calculating a compensation costs levy, the FSCS may include anticipated compensation costs for defaults expected to be determined in the 12-month period following the date of the levy. The total of all management expenses levies attributable to a financial year will be restricted to the amount set out on an annual basis in FEES 6 Annex 1.

FEES 6.1.7

handbook-guidance
In order to allocate a share of the amount to be funded by an individual participant firm, the funding arrangements are split into five classes: the deposit class; the life and pensions class; the investment class; the home finance class and the general insurance class. The business carried on by a participant firm determines into which class, or classes, it falls.

FEES 6.1.8

handbook-guidance
Within each class there are one or more sub-classes. These relate to different types of activity carried on by participant firms within each class. Within a class, individual participant firms are allocated for funding purposes to one or more sub-classes, depending on their business activities. This, together with the provisions on the allocation of levies to sub-classes up to their levy limits, meets a requirement of section 213(5) of the Act that the FSA, in making rules to enable the FSCS to impose levies, must take account of the desirability of ensuring that the amount of the levies imposed on a particular class of authorised person reflects, so far as practicable, the amount of claims made, or likely to be made, in respect of that class of person. The deposit class is made up of a single sub-class. This means that a reference to a sub-class will, unless the context otherwise requires, include a reference to the deposits class.

The management expenses levy

FEES 6.1.9

handbook-guidance
Section 223 of the Act (Management expenses) prevents the FSCS from recovering, through a levy, any management expenses attributable to a particular period in excess of the limit set in COMP as applicable to that period. 'Management expenses' are defined in section 223(3) to mean expenses incurred or expected to be incurred by the FSCS in connection with its functions under the Act, except:
(1) expenses incurred in paying compensation; and
(2) expenses incurred as a result of the FSCS making the arrangements to secure continuity of insurance set out in COMP 3.3.1 R and COMP 3.3.2 R or taking the measures set out in COMP 3.3.3 R and COMP 3.3.4 R when a relevant person is an insurer in financial difficulties.

FEES 6.1.10

handbook-guidance
A management expenses levy under COMP may consist of two elements. The first is a base costs levy, for the base costs of running the compensation scheme in a financial year, that is, costs which are not dependent upon the level of activity of the compensation scheme and which therefore are not referable to any specific default. Included in this category are items such as the salary of the members of the board of the FSCS, the costs of the premises which the FSCS occupies, and its audit fees. It would also likely include the cost of any insurance cover secured by FSCS against the risk of it paying claims out in circumstances where the levy limit of the particular class to which the claim would otherwise be attributable has exceeded its levy limit for the year, as the insurance cover is likely to benefit all classes which may have costs allocated to them if the levy limit of another class is breached. The amount that each participant firm pays towards a base costs levy is calculated by reference to the regulatory costs paid by the firm. All participant firms are liable to contribute towards a base costs levy.

FEES 6.1.11

handbook-guidance
The second element of a management expenses levy is a specific costs levy for the "specific costs" of running the compensation scheme in a financial year. These costs depend on the number of claims and types of default, and include the salaries of the staff of the FSCS and legal and other professional fees paid in respect of particular defaults. It also may include the cost of any insurance cover that FSCS secures against the risk of FSCS paying out claims above a given level in any particular sub-class (but below the levy limit for that sub-class for the year) or the cost of commercial borrowing to allow FSCS to pay claims attributable to a particular sub-class in advance of the next levy. Where a levy limit has been reached and FSCS secures borrowing in order to pay claims allocated to another sub-class in accordance with the rules on allocation in FEES 6.5.2R, the costs of borrowing are attributable to the sub-class whose levy limit has been reached. The specific costs are allocated to the sub-class which is responsible for those costs under COMP, on the basis of the protected claims against that person. The FSCS may include in a specific costs levy the specific costs that the FSCS expects to incur (including in respect of defaults not yet declared at the date of the levy) during the financial year of the compensation scheme to which the levy relates. The amount that each participant firm pays towards the specific costs levy is calculated by reference to the amount of business conducted by the firm in each of the sub-classes to which the FSCS has allocated specific costs. Each sub-class has a separate "tariff base" for this purpose, set out in FEES 6 Annex 3 R. Participant firms may be exempt from contributing to the specific costs levy.

FEES 6.1.13

handbook-guidance
The FSA intends to consult in January each year on the amount which it will set as the limit on the management expenses attributable to the forthcoming financial year of the FSCS.

The compensation costs levy

FEES 6.1.14

handbook-guidance
The compensation costs levy is made up of the compensation costs which the FSCS has incurred and has not yet recovered from participant firms (less any recoveries it has made using the rights that have been assigned to it), together with those compensation costs it expects to incur (including in respect of defaults yet to be declared) over the 12 months following the date of the levy.

FEES 6.1.15

handbook-guidance
Compensation costs are principally the costs incurred in paying compensation. Costs incurred in securing continuity of long-term insurance in safeguarding eligible claimants when insurers are in financial difficulties, and in making payments or giving indemnities under COMP 11.2.3 R are also treated as compensation costs. For funding purposes, these costs are allocated by the FSCS, and met by participant firms, in the same way as specific costs up to relevant levy limits and then in accordance with the allocation provisions in FEES 6.5.2 R.

FEES 6.1.16

handbook-guidance

If a participant firm is a member of more than one sub-class, the total compensation costs levy and specific costs levy for that firm will be the aggregate of the individual levies calculated for the firm in respect of each of the sub-classes. Each sub-class has a levy limit which is the maximum amount of compensation costs which may be allocated to a particular sub-class in a financial year for the purposes of a levy. Once the costs attributable to a particular sub-class have exceeded the levy limit the excess costs are allocated to the other sub-class in the same class, up to the levy limit of that other sub-class, and thereafter allocated to a 'general retail pool' of all the other sub-classes whose levy limits have not been reached (with the exception of the home finance providers). The amount of the excess cost to be allocated to each particular sub-class in the general retail pool is calculated pro-rata in accordance with the relative size of the levy limit of that sub-class to the sum of the levy limits of the remainder of the sub-classes in the general retail pool whose levy limits have not been reached. In the case of the deposits class, once the costs attributable to that class have exceeded the levy limit the excess costs are allocated to the general retail pool. The use made by FSCS of borrowing facilities to provide liquidity until the next levy does not affect this allocation of costs.

FEES 6.1.16A

handbook-guidance
FSCS may consider obtaining insurance cover, if available, against the risk that the value of claims FSCS pays out exceeds the levy limits of, or given levels within, particular classes or sub-classes. Any costs associated with the insurance would be allocated proportionally to the classes or sub-classes intended to benefit from that insurance.
  • 01/04/2008

Incoming EEA firms

FEES 6.1.17

handbook-guidance
Incoming EEA firms which obtain cover or 'top up' under the provisions of COMP 14 are firms whose Home State scheme provides no or limited compensation cover in the event that they are determined to be in default. Under FEES 6.6, the FSCS is required to consider whether incoming EEA firm's should receive a discount on the amount that they would otherwise pay as their share of the levy, to take account of the availability of their Home State cover. The amount of any discount is recoverable from the other members of the incoming EEA firm's sub-class.

FEES 6.2

Exemption

  • 01/01/2006

FEES 6.2.1

handbook-rule
(1) A participant firm which does not conduct business that could give rise to a protected claim by an eligible claimant and has no reasonable likelihood of doing so is exempt from a specific costs levy, or a compensation costs levy, or both, provided that:
(a) it has notified the FSCS in writing that those conditions apply; and
(b) the conditions in fact continue to apply.
(2) The exemption takes effect from the date on which the notice was received by the FSCS, subject to FEES 6.2.6 R.

FEES 6.2.2

handbook-rule
FEES 6.2.1 R does not apply to a participant firm that may be subject to a claim under COMP 3.2.4 R.
  • 01/01/2006

FEES 6.2.3

handbook-guidance
A participant firm to which FEES 6.2.2 R applies must report annual eligible income in accordance with FEES 6.5.13 R. Such a participant firm may take advantage of the option to report its annual income attributable to business conducted with or on behalf of eligible claimants.
  • 01/01/2006

FEES 6.2.4

handbook-rule
A participant firm which is exempt under FEES 6.2.1 R must notify the FSCS in writing as soon as reasonably practicable if the conditions in FEES 6.2.1 R no longer apply.

FEES 6.2.5

handbook-guidance
A participant firm to which the conditions in FEES 6.2.1 R no longer apply will then become subject to FEES 6.3.

FEES 6.2.6

handbook-rule
If a participant firm ceases to conduct business that could give rise to a protected claim by an eligible claimant and notifies the FSCS of this under FEES 6.2.1R (1), it will be treated as a participant firm to which FEES 6.7.6 R applies until the end of the financial year of the compensation scheme in which the notice was given.

FEES 6.2.7

handbook-guidance

The financial year of the compensation scheme is the twelve months ending on 31 March. The effect of FEES 6.2.6 R and FEES 6.2.1R (2) is that if a firm fails to notify FSCS of an exemption under FEES 6.2.1 R by 31 March it will be treated as non-exempt for the whole of the next financial year.

FEES 6.2.8

handbook-rule
For the purposes of FEES 6.2.1 R a participant firm will only be exempt from a specific costs levy or compensation costs levy for any given financial year if it met the conditions in FEES 6.2.1 R on 31 March of the immediately preceding financial year.

FEES 6.3

The FSCS's power to impose levies

  • 01/01/2006

General limits on levies

FEES 6.3.1

handbook-rule
The FSCS may at any time impose a management expenses levy or a compensation costs levy, provided that the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are, or will be, insufficient, taking into account:
(1) in the case of a management expenses levy, the level of the FSCS's anticipated expenditure in respect of those expenses in the financial year of the compensation scheme in relation to which the levy is imposed; and
(2) in the case of a compensation costs levy, the level of the FSCS's anticipated expenditure in respect of compensation costs in the 12 months following the levy.

FEES 6.3.2

handbook-guidance
The calculation of levies will also take into account previous levies, where funds raised in anticipation of meeting liabilities prove either more or less than the amount actually required.

FEES 6.3.3

handbook-guidance
The FSCS may impose one or more levies in a financial year to meet either its management expenses or its compensation costs. The FSCS may also impose interim levies, as part of its overall levy commitment. This flexibility allows the FSCS to phase its financing over the course of a financial year and thus avoid collecting levies from firms before the money is actually needed. The FSCS has committed itself in the Memorandum of Understanding with the FSA (the text of which can be found on the FSA website www.fsa.gov.uk) to publish regularly an indicative timetable for its levy procedures.

FEES 6.3.4

handbook-guidance
The discretion over levying in COMP also gives the FSCS, if it thinks this appropriate, the ability to use third parties as its agents in raising and collecting the levies.

Limits on compensation costs levies on sub-classes and classes

FEES 6.3.5

handbook-rule

The maximum amount of compensation costs for which the FSCS can levy each sub-class and class in any one financial year of the compensation scheme is limited to the amounts set out in the table in FEES 6 Annex 2.

Levy for compensation costs paid in error

FEES 6.3.10

handbook-rule
The FSCS may include in a compensation costs levy the costs of compensation paid by the FSCS in error, provided that the payment was made in good faith.

Management of funds

FEES 6.3.11

handbook-rule

The FSCS must hold any amount collected from a specific costs levy or compensation costs levy to the credit of the classes and relevant sub-classes, in accordance with the allocation established under FEES 6.4.6 R and FEES 6.5.2 R.

FEES 6.3.12

handbook-rule
Any funds received by the FSCS by way of levy or otherwise for the purposes of the compensation scheme are to be managed as the FSCS considers appropriate, and in doing this the FSCS must act prudently.

FEES 6.3.13

handbook-rule
Interest earned by the FSCS in the management of funds held to the credit of a sub-class must be credited to that sub-class, and must be set off against the management expenses or compensation costs allocated to that sub-class.

FEES 6.3.14

handbook-rule
The FSCS must keep accounts which show:
(1) the funds held to the credit of each class and relevant sub-class; and
(2) the liabilities of that class and relevant sub-class.

FEES 6.3.15

handbook-rule

The FSCS may use the money collected from firms within one class to pay compensation costs in respect of any sub-class within that class, so long as it ensures that this is done without prejudice to the participant firms from whom the money has been collected.

FEES 6.3.15A

handbook-guidance
FEES 6.3.15R deals with how FSCS may use money available to it and does not affect the rules on allocation in FEES 6.5.2R. Therefore the requirement that the procedure in FEES 6.3.15 R should not prejudice the participant firms does not apply to an allocation under FEES 6.5.2R.
  • 01/04/2008

FEES 6.3.16

handbook-guidance
FEES 6.3.15 R means that, for example:
(1) when crediting interest under FEES 6.3.13 R, the FSCS should regard any money collected from one sub-class which has been used to pay the compensation costs of another sub-class within the same class as standing to the credit of the first sub-class;
(2) the FSCS should not raise a levy under FEES 6.3.1 R on a sub-class solely because, as a result of the FSCS's action under FEES 6.3.15 R, there appear to be insufficient funds available to the credit of the sub-class to meet its expenses; and
(3) (2) would not be applicable to the extent that the funds used are in respect of costs allocated to the sub-class in accordance with the rules on allocation in FEES 6.5.2 R(1) and (2).

FEES 6.3.17

handbook-rule
(1) The FSCS may use any money held to the credit of one class (the creditor class) to pay compensation costs in respect of or allocated to another class (the debtor class) if the FSCS has reasonable grounds to believe that this would be more economical than borrowing funds from a third party or raising a levy.
(2) Where the FSCS acts in accordance with (1), it must ensure that:
(a) the creditor class is reimbursed by the debtor class as soon as possible;
(b) the debtor class pays interest at a rate equivalent to the Bank of England's repo rate from time to time in force; and
(c) the amount lent by the creditor class to the debtor class is taken into account by the FSCS when considering whether to impose a compensation costs levy on the creditor class under FEES 6.3.1 R.

FEES 6.3.18

handbook-guidance
FEES 6.3.17 R deals with how FSCS may use money available to it and does not affect the rules on allocation in FEES 6.5.2 R. Therefore FEES 6.3.17R(2) (a), (b) and (c) do not apply where the costs otherwise attributable to one debtor class are allocated to the creditor class in accordance with the rules on allocation in FEES 6.5.2 R.

FEES 6.3.19

handbook-rule
Unless FEES 6.3.20 R applies, any recoveries made by the FSCS in relation to protected claims must be credited to the sub-classes to which the related compensation costs were allocated.

FEES 6.3.20

handbook-rule
  1. (1) This rule applies where the FSCS makes recoveries in relation to protected claims where related compensation costs would have been met by a sub-class (sub-class A) had the levy limit for sub-class A not been reached and have therefore been met by another sub-class or sub-classes.
  2. (2) This rule applies even though the recovery is made in a subsequent financial year.
  3. (3) Recoveries referred to in (1) must be applied in the following order of priority:
    1. (a) (if the compensation costs were allocated to the general retail pool (see FEES 6.5.2 R(2)) to the classes and sub-classes to which the costs were allocated in accordance FEES 6.5.2 R(2) in the same proportion as those classes and respective sub-classes contributed, up to the total amount of that allocation plus interest at a rate equivalent to the Bank of England's repo rate from time to time in force;
    2. (b) (if the compensation costs were allocated to the other sub-class in the same class as sub-class A) to that other sub-class up to the total amount of that allocation plus interest at a rate equivalent to the Bank of England's repo rate from time to time in force; and
    3. (c) sub-class A.

FEES 6.3.20A

handbook-guidance
Recoveries under FEES 6.3.20 R are net of the costs of recovery.

FEES 6.3.21

handbook-rule

If the FSCS has more funds to the credit of a sub-class than the FSCS believes will be required to meet levies on that sub-class for the next 12 months, it may refund the surplus to members or former members of the sub-class on any reasonable basis.

Adjustments to calculation of levy shares

FEES 6.3.22

handbook-rule
The FSCS may adjust the calculation of a participant firm's share of any levy to take proper account of:
(1) any excess, not already taken into account, between previous levies of that type imposed in relation to previous periods and the relevant costs actually incurred in that period; or
(2) participant firms that are exempt from the levy under FEES 6.2; or
(3) amounts that the FSCS has not been able to recover from participant firms as a result of FEES 6.3.5 R; or
(4) amounts that the FSCS has not been able to recover from participant firms after having taken reasonable steps; or
(5) FEES 2.3 (Relieving Provisions), FEES 6.4.8 R (New participant firms), FEES 6.5.9 R (New participant firms), FEES 6.3.23 R (Remission of levy or additional administrative fee) or FEES 6.6 (Incoming EEA firms); or
(6) anything else that the FSCS believes on reasonable grounds should be taken into account.

FEES 6.3.22A

handbook-rule
The FSCS may not adjust the calculation of a participant firm's share of any levy under FEES 6.3.22 R on the grounds that it would be inequitable for that firm to pay that share or part of it or on the grounds that it would be inequitable for the FSCS to retain that share or part of it.

FEES 6.3.22B

handbook-guidance
The reason for FEES 6.3.22A R is that any such claim should be dealt with under FEES 2.3 (Relieving Provisions).

Firms acquiring businesses from other firms

FEES 6.3.22C

handbook-rule
(1) This rule applies to the calculation of the levies of a firm (A) if:
(a) either:
(i) A acquires all or a part of the business of another firm (B), whether by merger, acquisition of goodwill or otherwise; or
(ii) A became authorised as a result of B's simple change of legal status (as defined in FEES 3 Annex 1 Part 6);
(b) B is no longer liable to pay a levy; and
(c) that acquisition or change takes place after the date to which, or as of which, A's most recent statement of business under FEES 6.5.13 R is drawn up so far as concerns the sub-classes covered by B's business.
(2) A must pay an additional amount equal to the levy that would have been payable by B in relation to the relevant business and relevant sub-classes if the acquisition or change in status had not taken place and B had remained liable to pay levies. The amount is based on the most recent information supplied by B under FEES 6.5.13 R. A is included in the sub-classes applicable to the relevant business.
(3) This rule only applies with respect to those financial years of the FSCS for which A's levies are calculated on the basis of a statement of business under FEES 6.5.13 R drawn up to a date, or as of a date, before the acquisition or change in legal status took place.

Remission of levy or additional administrative fee

FEES 6.3.23

handbook-rule
If a participant firm's share of a levy or an additional administrative fee under FEES 6.7.4 R would be so small that, in the opinion of the FSCS, the costs of collection would be disproportionate to the amount payable, the FSCS may treat the participant firm as if its share of the levy or additional administrative fee amounted to zero.

Levies on the Society of Lloyd's

FEES 6.3.24

handbook-rule
The FSCS may impose a levy on the Society to be calculated as the aggregate of the levies that would be imposed on each member if this chapter applied to members, as follows:
(1) a proportionate share of a base costs levy in respect of the compensation scheme's costs for the period from 1 January 2004 to the end of the compensation scheme's financial year and a share of such levies for all subsequent financial years; and
(2) a specific costs levy and a compensation costs levy in respect of costs arising out of a relevant person being in default, arrangements made under COMP 3.3.1 R or measures taken under COMP 3.3.3 R where:
(a) the default occurs or the circumstances giving rise to the arrangements being made or the measures being taken, as the case may be, occur; and
(b) the protected contracts of insurance in connection with which the costs arise were entered into;
on or after 1 January 2004.

FEES 6.4

Management expenses

  • 01/01/2006

Obligation on participant firm to pay

FEES 6.4.1

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

Limit on management expenses

FEES 6.4.2

handbook-rule
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.

Participant firm's share

FEES 6.4.3

handbook-rule
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.

FEES 6.4.4

handbook-rule
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 and specific costs levy.

Base costs levy

FEES 6.4.5

handbook-rule

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 figure in (1).

Specific costs levy

FEES 6.4.6

handbook-rule
The 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 of the different activities represented by those sub-classes.

FEES 6.4.7

handbook-rule
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) identifying each of the relevant sub-classes to which the participant firm belongs, using the statement of business most recently supplied under FEES 6.5.13 R;
(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-classes identified in (1), but not yet levied;
(3) calculating, in relation to each relevant sub-class FF, the participant firm's tariff base as a proportion of the total tariff base of all participant firms in the sub-class, using the statement of business most recently supplied under FEES 6.5.13 R;
(4) applying the proportion calculated in (3) to the figure in (2); and
(5) if more than one class or sub-class is relevant, adding together the figure in (4) for each sub-class.

New participant firms

FEES 6.4.8

handbook-rule
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.

FEES 6.4.10

handbook-guidance
Since a firm that becomes a participant firm in the course of a financial year of the compensation scheme will already be obtaining a discount in relation to the base costs levy through the modified fee provisions of FEES 4.2.6 R, no rule is necessary in COMP for discounts on the base costs levy.

FEES 6.5

Compensation costs

  • 01/01/2006

FEES 6.5.1

handbook-rule
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.
  • 01/01/2006

FEES 6.5.2

handbook-rule

The FSCS must allocate any compensation costs levy to the sub-classes in proportion to the amount of compensation costs arising from, or expected to arise from, claims in respect of the different activities represented by those sub-classes up to the levy limit of each relevant sub-class and thereafter in the following order:

  1. (1) any excess must be allocated to the other sub-class in the same class up to the levy limit of that other sub-class (except in the deposit class, for which there is only one sub-class); and any excess must be allocated to the other sub-class in the same class up to the levy limit of that other sub-class (except in the deposit class, for which there is only one sub-class); and
  2. (2) any excess above the levy limit of the class must be allocated to each other sub-class, other than the home finance provision sub-class E1, whose levy limit has not been reached (the 'general retail pool'), in proportion to the relative sizes of the levy limits of those remaining sub-classes in the general retail pool.

FEES 6.5.2A

handbook-guidance
The use made by FSCS of borrowing facilities to provide liquidity until the next levy does not affect the allocation of costs incurred or anticipated.

FEES 6.5.2B

handbook-guidance
The calculation of the relative sizes of the levy limits for the purpose of FEES 6.5.2R (2) (including any allocations caused by the exhaustion of a receiving sub-class) is based on the original levy limit for the sub-classes (as set out in FEES 6 Annex 2) and not the remaining capacity in each sub-class.
  • 01/04/2008

FEES 6.5.2C

handbook-guidance
When FSCS allocates excess compensation costs levies otherwise attributable to a class which has reached its levy limit, in accordance with FEES 6.5.2R (2), a sub-class to which any excess has been allocated (the 'receiving sub-class') may, as a result of that allocation, itself reach its levy limit. In that case, the effect of FEES 6.5.2 R is that any resulting excess levy beyond the levy limit of the receiving sub-class is to be allocated amongst the remaining sub-classes whose levy limits have not been reached, to the exclusion of the receiving sub-class. This process is repeated until the compensation costs levy has been met in full or the general retail pool has been exhausted.
  • 01/04/2008

FEES 6.5.3

handbook-rule
If a participant firm which is in default has carried on a regulated activity other than in accordance with a permission, the FSCS must allocate any compensation costs or specific costs arising out of that activity to the relevant sub-class which covers that activity or if a levy limit of the relevant sub-class or class has been exceeded, FSCS must allocate any compensation costs levy on the same basis as set out in FEES 6.5.2 R.

FEES 6.5.4

handbook-rule
If the relevant person in default is an appointed representative, the FSCS must allocate any compensation costs or specific costs arising out of a regulated activity for which his principal has not accepted responsibility to the relevant sub-class for that activity or if a levy limit of the relevant sub-class or class has been exceeded, FSCS must allocate any compensation costs levy on the same basis as set out in FEES 6.5.2 R.

FEES 6.5.5

handbook-rule
(1) 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.
(2) If a levy relates solely to costs allocated in excess of a particular levy limit (1) does not apply to a participant firm member of the sub-class or class whose levy limit has been exceeded.

FEES 6.5.6

handbook-rule
The FSCS must calculate each participant firm's share of a compensation costs levy (subject to FEES 6.3.22 R (Adjustments to calculation of levy shares)) by:
(1) identifying each of the sub-classes to which each participant firm belongs, using the statement of business most recently supplied under FEES 6.5.13R (1);
(2) identifying the compensation costs falling within FEES 6.5.1 R allocated, in accordance with FEES 6.5.2 R, to the sub-classes identified in (1);
(3) calculating, in relation to each relevant sub-class, the participant firm's tariff base as a proportion of the total tariff base of all participant firms in the sub-class, using the statement of business most recently supplied under FEES 6.5.13 R;
(4) applying the proportion calculated in (3) to the figure in (2); and
(5) if more than one class or sub-class is relevant, adding together the figure in (4) for each sub-class.

Sub-classes and tariff bases for compensation cost levies and specific costs levies

FEES 6.5.7

handbook-rule
When calculating a participant firm's share of a compensation costs levy or specific costs levy allocated to each sub-class the FSCS must use the sub-classes and tariff bases as set out in the table in FEES 6 Annex 3 R.
(1) [deleted]
(2) [deleted]
(3) [deleted]
(4) [deleted]
(5) [deleted]

FEES 6.5.8

handbook-guidance
Guidance on parts of FEES 6 Annex 3 R can be found in FEES 6 Annex 4.

New participant firms

FEES 6.5.9

handbook-rule
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 compensation costs levy made in that year.

Membership of several classes or sub-classes

FEES 6.5.12

handbook-guidance
A participant firm may belong to more than one class, and more than one sub-class within the same class.

Reporting requirements

FEES 6.5.13

handbook-rule
(1) 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:
(a) sub-classes to which it belongs; and
(b) the total amount of business (measured in accordance with the appropriate tariff base or tariff bases) which it conducted, in respect of the most recent valuation period (as specified by FEES 6 Annex 3 R (Financial Services Compensation Scheme - classes and sub-classes)) ending before the relevant year in relation to each of those sub-classes.
(2) In this rule the relevant year means the year in which the month of February referred to in (1) falls.
(3) This rule does not apply in relation to the home finance provision sub-class E1. Therefore any reference in the Handbook to information that is or must be supplied under this rule must be read, in the case of sub-class E1, as if it referred to the corresponding provisions relating to FSA periodic fees.

FEES 6.5.13A

handbook-guidance
For example, when the tariff base for a particular sub-class is based on a firm's annual eligible income the valuation period for that sub-class is the firm's last financial year ending in the year to 31 December preceding the financial year of the FSCS for which the calculation is being made. In the case of a firm in sub-class A1 (Deposits) its valuation period will be 31 December.

FEES 6.5.14

handbook-rule
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.

FEES 6.5.15

handbook-rule
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.

FEES 6.5.16

handbook-rule
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:
(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
(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.

FEES 6.6

Incoming EEA firms

  • 01/01/2006

FEES 6.6.1

handbook-rule
If an incoming EEA firm, which is a BCD credit institution, an IMD insurance intermediary or MiFID investment firm, is a participant firm, the FSCS must give the firm such discount (if any) as is appropriate on the share of any levy it would otherwise be required to pay, taking account of the nature of the levy and the extent of the compensation coverage provided by the firm's Home State scheme.

FEES 6.7

Payment of levies

  • 01/01/2006

FEES 6.7.1

handbook-rule
A participant firm must pay its share of any levy made by the FSCS:
(1) in one payment; or
(2) where the FSCS agrees, quarterly, at the beginning of each quarter, by direct debit agreement.

FEES 6.7.2

handbook-guidance
The amount paid under a direct debit arrangement will be adjusted on a continuous basis to take account of interim levies and other adjustments made during the course of the financial year.

FEES 6.7.3

handbook-rule
A participant firm's share of a levy to which FEES 6.7.1R (1) applies is due on, and payable within 30 days of, the date when the invoice is issued.

FEES 6.7.4

handbook-rule
If a participant firm does not pay its share of a levy subject to a direct debit agreement as required by FEES 6.7.1R (2), the entire amount of the levy becomes due and payable to the FSCS, and additional administrative fees are payable at the rate set out in FEES 2.2.1 R.

FEES 6.7.5

handbook-rule
A participant firm liable to pay its share of the levy under FEES 6.7.1 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 6.7.6

handbook-rule
If a firm ceases to be a participant firm part way through a financial year of the compensation scheme:
(1) it will remain liable for any unpaid levies which the FSCS has already made on the firm;
(2) the FSCS may make a levy upon it (which may be before or after the firm has ceased to be a participant firm, but must be before it ceases to be an authorised person) for the costs which it would have been liable to pay had the FSCS made a levy on all participant firms at the time of the levy on the firm;
(3) the FSCS may make a levy upon the firm (which may be before or after the firm has ceased to be a participant firm, but must be before it ceases to be an authorised person) for the purpose of meeting its expenses in relation to compensation costs and/or management expenses incurred or expected to be incurred at any time in the future in respect of defaults which have already occurred;
(4) the FSCS may estimate any costs referred to in (3) by any method or approach it considers appropriate, and adjust them to reflect the time value of money based on the funding arrangements in place in relation to the default; and
(5) paragraphs (3) and (4) apply notwithstanding any other provision in this chapter.

FEES 6 Annex 1

Financial Services Compensation Scheme - Management Expenses Levy Limit

handbook-rule

FEES 6 Annex 2

Financial Services Compensation Scheme - annual levy limits

  • 06/11/2007

handbook-rule
This table belongs to FEES 6.3.5 R and FEES TP 2.5.2R

FEES 6 Annex 3

Financial Services Compensation Scheme - classes and sub-classes

  • 06/11/2007

handbook-rule
This table belongs to FEES 6.5.7 R and FEES TP 2.5.2R

FEES 6 Annex 4

Guidance on the calculation of tariff bases

  • 06/11/2007

handbook-guidance
This table belongs to FEES 6.5.8 G

Export chapter as

Transitional Provisions and Schedules

FEES TP 1

Transitional Provisions

FEES TP 1.1

FEES TP 2

Transitional provisions relating to changes to the FSCS levy arrangements taking effect in 2007/8 and in 2008/9

FEES TP 3

Transitional provisions relating to changes to the FSCS levy arrangements taking effect in 2010/11

FEES TP 4

Transitional provisions relating to information requirements following changes to FEES 4 or 5

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