Prudential Regulation Authority Rulebook

3.1

Periodic fees are payable in respect of each PRA fee year by any person who is, or becomes, a firm during the fee year.

3.2

The amount payable depends upon the fee block to which the firm has been allocated. Firms falling into more than one fee block pay periodic fees in relation to each.

3.3

Periodic fees payable by firms in any fee year will be the sum of the following (so far as applicable to them):

1. (1) a minimum periodic fee at the rate specified in Table I of the Periodic Fees Schedule;
2. (2) a transition costs allocation calculated in accordance with Table II of the Periodic Fees Schedule;
3. (3) periodic fees at the rate specified in Table III, subject to any modifications in Table IV and Table V, of the Periodic Fees Schedule calculated as follows:
1. (a) applying the tariff bases and valuation points set out in 3.4 to the tariff data which they have supplied to the PRA or its collection agent;
2. (b) where applicable, grouping tariff data into the tariff bands shown in Column 3 of Table III of the Periodic Fees Schedule; and
3. (c) applying the appropriate tariff rate as shown in Column 4 of Table III of the Periodic Fees Schedule;
4. the fee being the total of sums payable in respect of all tariff bands; and
5. (4) the ring-fencing implementation fee if applicable.

3.4

The tariff bases and valuation points referred to in 3.3 (3)(a) are:

1. (1) for firms in the deposit acceptors fee block (A1):
1. (a) if the firm is a bank and reports monthly, average MELs for October, November and December prior to commencement of the fee year; or
2. (b) if the firm is a bank and reports quarterly, MELs for the December prior to commencement of the fee year; or
3. (c) if the firm is a building society, average MELs for October, November and December prior to commencement of the fee year; or
4. (d) if the firm is a credit union, either its MELs for the December preceding the commencement of the fee year or, in the absence of December MELs its MELs as disclosed by its most recent annual return submitted for regulatory reporting purposes prior to the December preceding commencement of the fee year.
2. (2) for firms in the general insurance fee block (A3):
1. (a) if the firm is an insurer, the sum of its annual gross premium income for, and its gross technical liabilities at the end of, the firm’s financial year which ends in the calendar year to 31 December prior to commencement of the fee year, noting that:
1. (i) in the case of a pure reinsurer carrying on general insurance business through a branch in the United Kingdom, or an insurer whose head office is not in an EEA state carrying on general insurance business through a branch in the United Kingdom, or an EEA –deposit insurer, only premiums received and gross technical liabilities held in respect of its United Kingdom business are included;
2. (ii) for a Swiss general insurance company premiums and gross technical liabilities include those relevant to the operations of the company’s United Kingdom branch; and
3. (iii) a firm need not include premiums and gross technical liabilities relating to pure protection contracts which it reports, and pays a fee on, in the A4 life insurers’ fee block.
4. or
2. (b) if the firm is a non-directive friendly society, the value of contributions as income receivable in respect of United Kingdom business included in its income and expenditure account at the end of the firm’s financial year which ends in the calendar year to 31 December prior to commencement of the fee year;
1. or
3. (c) if the firm is a directive friendly society, the value of gross premiums written in respect of United Kingdom business included in its income and expenditure account at the end of the firm’s financial year which ends in the calendar year to 31 December prior to commencement of the fee year,
4. and
5. (d) for UK ISVPs, the tariff base is not relevant and a flat fee shown in Table III of the Periodic Fees Schedule is payable,
3. (3) for firms in the life insurance fee block (A4), the sum of adjusted gross premium income for, and mathematical reserves for fees purposes valued at the end of, the firm’s financial year ending in the calendar year to 31 December prior to commencement of the fee year noting that:
1. (a) only premiums receivable and mathematical reserves held in respect of United Kingdom business are relevant; and
2. (b) an insurer must include in its calculation of adjusted gross premium income and mathematical reserves for fees purposes the value relating to all risks ceded to ISPVs.
4. (4) for firms in the Lloyd’s managing agents fee block (A5), active capacity as reported to the Society for the underwriting year which is in progress at the beginning of the fee year.
5. (5) for firms in the designated firms acting as principal fee block (A10) number of traders as at 31 December prior to commencement of the fee year.

3.5

The periodic fees payable by:

1. (1) the Society are as specified in Table III of the Periodic Fees Schedule; and
2. (2) fee-payers subject to the ring-fencing implementation fee are as specified in 3.18.

3.6

The following requirements apply to all firms whose activities give rise to periodic fees, other than firms which pay only a flat rate of fee:

1. (1) within two months after, or where relevant after the end of, the relevant valuation point, the firm must provide to the PRA’s collection agent the tariff data on which the periodic fee payable by the firm is to be calculated as at that valuation point
2. (2) if the PRA does not, on its own behalf or through its collection agent, obtain sufficient, or sufficiently detailed, information, the PRA may obtain this through its general information-gathering powers;
3. (3) for an incoming EEA firm or an incoming Treaty firm, the information required is in relation to the regulated activities of the firm carried on in the United Kingdom, other than those provided on a cross border services basis;
4. (4) as periodic fees in respect of any fee year are calculated on the basis of firms’ tariff data for the previous fee year, there may be insufficient tariff data on which the periodic fees may be calculated under 3.4 where a firm becomes authorised for the first time or undertakes a new PRA-regulated activity, resulting in a significant change to its business. In those circumstances, the periodic fees payable will be calculated in accordance with:
1. (a) 3.7 for firms in their first fee year;
2. (b) 3.9 and 3.10 for firms in the deposit acceptors fee block (A1), the general insurance fee block (A3) or the life insurance fee block (A4) in their second fee year or any subsequent fee year;
5. (5) a firm intending to apply any of the methods of calculation in 3.9 must notify the PRA’s collection agent by the date specified in 3.6 (1).
6. (6) Unless 3.7 or 3.9 applies, where a firm has not complied with 3.6 (1) for any period by reference to which periodic fees are to be calculated, but a valuation is available for the previous period by reference to which periodic fees are to be calculated, the fee should be calculated using the tariff data applicable to the previous period multiplied by 1.10. An additional administration fee of £125.00 is payable in this case in addition to the minimum fee.
7. (7) Where a new requirement is imposed on firms under the PRA Rulebook or an existing requirement amended but does not take effect until a future fee year, in the absence of an express statement to the contrary, firms must comply with the new requirement immediately in so far as it relates to the supply of information under 3.6 (1).

3.7

A firm in its first fee year pays periodic fees based on its projected valuation for the first twelve months of its new business as follows:

1. (1) The calculation requires the firm to identify, in Table III of the Periodic Fees Schedule, the tariff rates which will be relevant to it as a result of its new or extended permission and apply the formula in 3.7 (2). The resulting figure will be the periodic fee payable by the firm for its first fee year.
2. (2) The formula referred to at 3.7(1) is (A+B) x C, where:
1. A = the amount arrived at by applying the tariff rates in Table III of the Periodic Fees Schedule to the firm’s projected valuation for its first year of new business, as provided to the PRA or its collection agent during the application and data collection process;
2. B = the A.0 minimum fee, unless already paid; and
3. C = the number of calendar months (inclusive) between the calendar month during which the firm received its new or extended permission and the last calendar month of the fee year ÷ 12.

3.8

3.9 applies only to firms in the deposit acceptors fee block (A1), the general insurance fee block (A3) or the life insurance fee block (A4).

3.9

Subject to 3.10, where in:

1. (1) its second fee year; or
2. (2) any subsequent fee year,

a firm has not yet submitted sufficient tariff data to enable the periodic fees calculation at 3.6 (1) to be made in respect of that fee year, periodic fees will be calculated in accordance with Table A below:

3.10

Except in the circumstances to which 3.9 applies, firms in their second fee year or any subsequent fee year after receiving a new or extended permission must calculate their new or additional liability for periodic fees in accordance with 3.4.

3.11

The following modifications to periodic fees will apply:

1. (1) In relation to incoming EEA firms and incoming Treaty firms:
1. (a) the modifications in 3.7 apply only in relation to the relevant regulated activities of the firm which are EEA passported activities or activities of a Treaty firm exercising rights under Schedule 4 of FSMA; and
2. (b) the tariff rates set out in Table III of the Periodic Fees Schedule only apply to the regulated activities of the firm in the United Kingdom and the tariffs are modified in accordance with Table IV of the Periodic Fees Schedule.
2. (2) Periodic fees in the A3 general insurance fee block and the A4 life insurance fee block payable by firms outside the scope of the Solvency II Directive are subject to the modifications in Table V of the Periodic Fees Schedule, to be applied to the final figure arrived at under 3.3 (3) once all other modifications relevant to the firm have been taken into account.

3.12

Where:

1. (1) a firm (A) acquires all or part of the business of another firm (B) in relation to which a periodic fee would have been payable by B; or
2. (2) A becomes authorised as a result of B’s simple change of legal status as defined in 4.5 (4), the following rules apply:
1. (a) if before the date of the acquisition, B had already paid the periodic fees in relation to the business or part of the business acquired by A, A will not pay a further fee; and
2. (b) if the acquisition occurs after the valuation point applicable to the business or part of the business acquired as set out in 3.4, A will pay periodic fees in relation to the period following the acquisition as if the acquisition had occurred immediately before the relevant valuation point.
3. (3) Where the acquisition involves a calculation of periodic fees for the A4 life insurers fee block:
1. (a) when calculating the new regular premium business element of its adjusted gross premium income, A should not include business transferred from B under the procedure set out in Part VII of FSMA during the relevant financial year unless the transfer involved the creation of new contracts between the policyholders subject to the transfer and A;
2. (b) If any business is transferred to A from B under the procedure set out in Part VII of FSMA and that business would have been included in B’s tariff base in the absence of the transfer, that business should be included in A or B’s tariff base depending on the date of transfer as required by 3.12(2)(b).
3. (c) Mathematical reserves for fees purposes should include all new business transferred from B.

3.13

If a firm makes an application to cancel or reduce the scope of its Part 4A permission before the start of a fee year, the obligation to pay periodic fees under 3.1 will apply as if the relevant variation or reduction in scope had also taken effect immediately before the start of the fee year.

3.14

Other than where the PRA exercises the discretion in 2.9 it will not waive liability for, or refund, periodic fees after the start of the fee year to which they relate should the firm cancel its Part 4A permission or if the new business activity or event which has given rise to the fee no longer applies to the firm.

3.15

The due date for payment of periodic fees is as follows:

1. (1) Subject to 3.15 (3), any firm whose total liability for periodic fees in the previous fee year was less than £50,000 must pay the total periodic fee due for the current fee year in full by 1 August.
2. (2) Any firm whose combined total liability for periodic fees payable to the FCA and the PRA in the previous fee year was £50,000.00 or above must pay its periodic fees for the current year in two tranches as follows:
1. (a) an amount equal to 50% of the PRA periodic fee payable in the previous fee year on or before 1 April in the current fee year; and
2. (b) the balance of the periodic fee for the current fee year by 1 September.
3. (3) If a firm cancels its Part 4A permission in the way set out in Permissions and Waivers or the PRA has exercised its own-initiative powers to cancel a firm’s Part 4A permission, the total amount of periodic fees for the fee year, less any amounts already paid, become payable immediately before the cancellation takes effect.

3.16

A fee payer need not pay a periodic fee on the due date for payment under the relevant provision of 3 if that date falls during a period during which circumstances described in General Provisions 2.2 exist and the firm has reasonable grounds to believe that those circumstances impair its ability to pay the fee, in which case the firm must pay on or before the fifth business day after the end of that period.

3.17

Fee-payers must comply with directions from the PRA or its collection agent as to payment of periodic fees arising from any variance between budgeted and actual AFR or any corrections to the AFR once final, audited figures are available in relation to any fee year. As the PRA may determine:

1. (1) a surplus of fee income against AFR may result in a credit to firms or fee blocks; and
2. (2) a shortfall may necessitate a call for additional fees.

3.18

In the fee year commencing on 1 March 2016 and subsequent fee years:

1. (1) The PRA will charge a ring-fencing implementation fee to recover the annual cost to the PRA, as determined by the PRA, of implementing ring-fencing.
2. (2) All firms within ring-fencing fees groups are subject to ring-fencing implementation fees. The PRA may require that a single firm pays all ring-fencing implementation fees due to the PRA by the group.
3. (3) In each fee year the PRA will allocate to each ring-fencing fees group the proportion referred to in 3.18 (4) of the cost referred to in 3.18 (1). An amount reflecting this proportion will be the total fee payable by the group.
4. (4) The proportion referred to in 3.18 (3) was determined by the PRA as at 1 March 2016 in accordance with the following formula (all figures rounded to the nearest whole number):

[(X + Y) ÷ 2] %

where

X = [core deposits (ring-fencing fees group) ÷ core deposits (all ring-fencing fees groups)] x 100

and

Y = [assets outside expected RFB sub-group (ring-fencing fees group) ÷ assets outside expected RFB sub-groups (all ring-fencing fees groups)] x 100

1. (5) Fee payers must comply with directions from the PRA or its collection agent as to payment of ring-fencing implementation fees arising from any variance between the PRA’s budgeted costs under 3.18 (1) and its actual costs once final, audited figures are available in relation to any fee year. A surplus of fee income against the PRA’s actual costs may result in a credit to the firms making payment and a shortfall may necessitate a call for additional fees.
2. (6) Where an application for a new authorisation or variation of Part 4A permission is made in the context of ring-fencing, no regulatory transaction fee will be payable under 4.5 or 4.7 if a ring-fencing implementation fee is payable under 3.18 whether by the applicant or another fee payer.

3.19

The transitional rule at 3.20 applies only to fee payers liable to pay periodic fees in the A3 general insurance fee block or the A4 life insurance fee block. Unless otherwise provided, it supplements all other Part rules relating to the calculation of periodic fees.

3.20

The following shall apply to the calculation of periodic fees for the fee year commencing on 1 March 2017:

1. (1) Except as provided in 3.20(5)(a), for the purposes of calculating periodic fees payable under 3.3(3) in the fee year commencing on 1 March 2017 the following adjusted tariff base shall be used:
1. (a) for firms in the general insurance fee block (A3):
1. (i) if the firm is an insurer, the sum of its annual gross premium income for, and gross technical liabilities at the end of, the firm’s financial year which ended in the calendar year to 31 December 2015 and not the calendar year to 31 December prior to commencement of the fee year.
2. (ii) if the firm is a non-directive friendly society the value of contributions as income receivable in respect of United Kingdom business included in its income and expenditure account at the end of the firm’s financial year which ends in the calendar year to 31 December 2015 and not the calendar year to 31 December prior to commencement of the fee year.
3. (iii) if the firm is a directive friendly society the value of gross premiums written in respect of UK business included in its income and expenditure account at the end of the firm’s financial year which ends in the calendar year to 31 December 2015 and not the calendar year to 31 December prior to commencement of the fee year.
2. and
3. (b) for firms in the life insurance fee block (A4), the sum of adjusted gross premium income for, and mathematical reserves for fees purposes valued at the end of, the firm’s financial year ending in the calendar year to 31 December 2015 and not the calendar year to 31 December prior to commencement of the fee year.
2. (2) Firms subject to this rule must on or before 28 February 2017:
1. (a) notify the PRA’s collection agent of any insurance business transfer, either to or from the firm, that has taken place using the procedure under Part VII FSMA or Part VIII of the Friendly Societies Act 1992 during the period specified in 3.20(4);
2. and
3. (b) provide such information as the PRA acting through its collection agent may require to establish the extent to which the tariff data referred to in 3.20(4) has increased or decreased as a result of the transfer and the amended data so provided will form the basis of the periodic fees calculation for the fee year commencing on 1 March 2017.
3. (3) Firms may on or before 28 February 2017 voluntarily submit amended tariff data to reflect the fact that the firm has gone into run-off during the period specified in 3.20(4).
4. (4) The period referred to in 3.20(2) and 3.20(3) is from:
1. (a) the date in the 2015 calendar year that, under Fees 3.4, was the last day of the firm’s valuation point for the tariff data that would form the basis of periodic fees calculations in the fee year commencing on 1 March 2016;
2. to
3. (b) 31 December 2016.
5. (5) The following rules relating to periodic fees will not apply so long as the transitional rule remains in force:
1. (a) 3.9 and 3.10. The periodic fees calculation based on projected valuations in 3.7 will instead be applied to all firms (whether in their first fee year, second fee year or a subsequent fee year) that did not submit, or submitted insufficient, tariff data as at the December 2015 valuation point to enable 3.20(1) to be given effect, subject to the modification that, for firms in their second and subsequent fee years, the formula in 3.7(2) is A+B and not (A+B) x C;
2. and
3. (b) 3.12.
6. (6) To assist with the formulation of fees policy for the fee year commencing on 1 March 2018 and subsequent fee years, firms will comply with the requests of the PRA or its collection agent for tariff data in respect of their financial years ending 31 December 2016 and 31 December 2017.