FCA to charge for SM&CR changes and hike new firm fees
November 24, 2020
What has happened?
The FCA is set to increase application fees and also to begin charging for change of control applications and for personnel changes under the Senior Managers and Certification Regime. In its consultation paper CP 20/22 on policy proposals, published on November 19th, the regulator proposed to increase the application fees paid by firms seeking authorisation, something which it last reviewed in 2014. Fees to be paid by cryptoasset firms are also being assessed.
What do you need to do?
The FCA is proposing to increase fees for straightforward authorisation applications from £1,500 to £2,500, and for moderately complex ones from £5,000 to £10,000. This is intended to help “redress the balance of cost recovery” away from existing fee-payers.
It is also proposing to introduce fees for changes in control applications, for which there is currently no charge, as well as for changes made to personnel under the SM&CR. From 2021/22 onwards, it proposes to charge firms as they apply and a charge of £250 is seen as appropriate for this. The new SM&CR charge would also apply to principal firms applying on behalf of their appointed representatives.
The regulator is also seeking to introduce a £2,500 fee for claims management firms that solely apply for permission to seek out people who may want to make a claim. According to the FCA, these firms act as lead generators and engage only in marketing activities before passing any prospective leads to other claims management firms or solicitors. The new lead generator charge puts these “lower risk” claims firms in the same fee bracket as financial advisers and mortgage brokers.
The new fee will not affect lead generators who also seek the higher risk permission of ‘advice, investigation or representation.’ These firms will now pay a fee of £10,000, regardless of their income. The lower fee of £1,200 for CMCs with incomes up to £1m is to be removed.
Concerning periodic fees for cryptoasset businesses, the FCA will recover its annual supervisory costs and the balance of its set-up costs through periodic fees from 2021/22. All cryptoasset businesses will move into a single fee-block (fee-block G.23) and their fees will be based on income from the cryptoasset activities that the FCA supervises under the Money Laundering Regulations (income from the provision of cryptoasset exchanges and custodian wallet services only). Firms with up to £100,000 of income would pay minimum fees only while those with incomes above £100,000 would pay the minimum fee plus a variable rate.
Cryptoasset firms will be required to report their supervised cryptoasset income on the basis of their own financial years and to submit the data within two months of the year-end. Fees will be calculated from the income reported during the previous calendar year, so 2022/23 fees will be based on the financial year 2020/21. Periodic fees for 2021/22 will be charged on the income that firms reported in their applications.
The FCA will consult on the fee rate for 2021/22 in April 2021 and will finalise the charges in a policy statement in July. It is expected that the rate will be around £10 per £k of supervised cryptoasset income above the minimum fee threshold of £100,000. A minimum fee of £2,000 is seen as realistic. Invoices will be issued between July and October.
Comments on the new consultation paper can be made to the FCA by 22nd January 2021.
How can we help you?
If you’d like to know more about how we can help you with your FCA authorisation or change of control applications or fee arrangements, or with any other aspect of FCA compliance, our expert team is here to help.