How we calculate annual fees

Find out what we consider when calculating your annual fee, and read about fee blocks, extra fees and thresholds.

We are independent of Government and recover our yearly running costs through the annual fees we charge authorised firms.

Our yearly running costs (annual funding requirement (AFR)) include our:

  • budget
  • money for new activities or regulatory changes

Fee-blocks: how we allocate our AFR

We allocate our total AFR between ‘fee-blocks’.

Fee-blocks group together firms that undertake similar regulated activities. Each firm is allocated to one or more fee-blocks according to the activities it carries out. So a firm can be in more than one fee-block.

We assess how much the different types of activity will cost to regulate and allocate a proportion of the AFR to each fee-block on that basis.

The fee-blocks across which the AFR is allocated are:

  • A.0 - minimum fee
    • AP.0 - FCA prudential fee
    • A.1 - deposit acceptors
    • A.2 - home finance providers and administrators
    • A.3 - general insurers
    • A.4 - life insurers
    • A.5 - managing agents at Lloyd’s
    • A.6 - the Society of Lloyd’s
    • A.7 - portfolio managers
    • A.9 - managers and depositories of investment funds, and operators of collective investment schemes or pension schemes
    • A.10 - firms dealing as principal
    • A.13 - advisory arrangers, dealers or brokers
    • A.14 - corporate finance advisors
    • A.18 - home finance providers, advisers and arrangers
    • A.19 - general insurance mediation
    • A.21 - firms holding client money, or assets, or both
  • B - recognised investment exchanges, operators of multilateral trading facilities, recognised auction platforms and service companies
  • C - collective investment schemes
  • D - designated professional bodies
  • E - issuers and sponsors of securities a depository receipts
  • F - unauthorised mutual societies
  • G - firms registered under Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and firms covered by the Regulated Covered Bonds Regulations 2008, Payment Services Regulations 2009 and Electronic Money Regulations 2011

The following fee-blocks fund our consumer credit costs:

  • CC1 - firms with limited consumer credit permission
  • CC2 - firms with a full consumer credit permission

How we calculate your fee

We calculate your fee using your firm’s ‘tariff data’. Tariff data varies across the fee-blocks and is used as a measure of the scale of a firm’s activities. Further details of the tariff bases can be found in FEES4 Annex 1A of the Handbook. We divide a fee-block’s proportion of the AFR by the total ‘tariff base’ of all the firms in the block. This gives us a fee rate per unit.

We then calculate a firm’s fee by multiplying its tariff base by the fee rate.

Some examples of tariff bases we use are:

  • annual income
  • value of funds managed, or
  • number of mortgages

So, for example, where the tariff base for fee-block A19 is annual income in relation to insurance mediation, we might set the fee rate at £5.00 for fee-block A19 when the annual income is greater than £100,000. The firm’s fee for A19 would then be £5 multiplied by each £/£ thousand or part thousand.

FCA - Newly authorised firms – useful information (PDF)

Minimum standard fee

Most firms with the ‘A’ fee-blocks will pay a minimum fee of £1,084 to the FCA.

However, if your firm is dual-regulated by the Prudential Regulation Authority (PRA) and the FCA, the minimum fee will be £542 to the FCA and £500 to the PRA.

Some firms pay a reduced minimum fee. We use categories 1 to 4 on your invoice to indicate the minimum fee payable.

  1. Small credit unions – with £0 to £0.5m of modified eligible liabilities (the tariff measure for the A.1 fee-block into which credit unions are allocated).

  2. Non-directive friendly societies – with £0 to £0.5m of gross premium income and £0 to £1m of gross technical liabilities for firms conducting fee-block A003 activities, and/or £0 to £1m of adjusted gross premium income and £0 to £1m of mathematical reserves for firms conducting A004 activities.

  3. Medium-sized credit unions – with £0.5 to £2m of modified eligible liabilities.

  4. All other firms also regulated by PRA under the Financial Services Act.

  5. All firms that are regulated only by FCA under the Financial Services Act.

Extra fees

You may have to pay extra fees if your firm is in one of the ‘A’ fee-blocks and you are also a:

  • payment services provider (£400)
  • small electronic money institution (£1,000)
  • large electronic money institution (£1,500)
  • consumer credit firm (depending on permission a fee between £100 - £1,000) plus a variable rate if the consumer credit income is greater than 250,000

This covers the costs of these particular activities which are separate from the FSMA A-blocks.

Find out more about extra fees in the Fees Manual in the Handbook and more about fees and levies for consumer credit firms.

Thresholds

In each fee-block we set a threshold. Below the threshold a firm pays only the minimum standard fee as above.

We usually calculate the threshold to keep around 35% to 45% of firms below it in each fee-block. This means that the ‘smaller firms’ that do not use the FCA’s time are not unfairly charged.

Changes to your tariff data may affect how much you pay. So, for example, if your tariff data rises above the threshold, you will pay an extra fee for that fee-block.

If all your tariff data falls below the threshold, you will only pay the minimum fee. This applies however many fee-blocks your firm is in.

Your bill will comprise your minimum fee plus the sum of any extra fees due in every fee-block where you exceeded the threshold.

Cancelling or reducing your permissions

You will be liable to pay a full year’s periodic fee for the year in which you apply to cancel (based on April to March).

If you intend to cancel your authorisation or reduce your permissions, your application must reach us by 31 March (or before the last day in February if you are also regulated by the PRA). Any application received after this date will not affect the fees and levies invoiced for the following fee period, and they are non-refundable.

However if, due to the continuing nature of your business, the variation or cancellation does not take effect within 3 months from 1 April – that is, by 30 June - then the fees for this financial year remain due (see FEES 4.3.13 of the Handbook).

Connect

You should apply for cancellation on Connect, our online system for applications and notifications.