Fund managers and operators of schemes will contribute £54.4m in regulatory fees to the FCA’s £519.3m budget for 2016/17.
The FCA’s budget will increase 8 per cent this year compared to its £491.6m costs in 2015/16, but the increase in costs is due to the introduction of consumer credit to the FCA’s remit. Excluding these costs the budget has reduced 1.6 per cent to £471.4m.
Of this, financial services firms will pay £469.8m in regulatory fees, thanks to a £49.6m rebate from financial penalties. The Treasury is paid the amounts levied in regulatory fines less retained enforcement costs.
Portfolio managers will pay £42.6m of the levy, a 5.1 per cent decrease on the previous year. Managers and depositories of investment funds, collective investment schemes or pension schemes will pay £11.8m, a 9.5 per cent reduction on the previous year’s costs.
This reductions reflect adjustments for scope change from Aifmd recovered over the past two years.
Investment advisers and mortgage and general insurance brokers will take on the biggest share of fees, contributing 28.4 per cent, or £133m, to the budget.
The FCA, which is entirely funded by fees and levies for the firms it regulates, will be seeking feedback on the proposed fees until 27 May, before final rules are published at the end of June.
Breaking down the FCA’s proposed costs for 2016/17, IT expenditure increased from £19.6m in 2015/16 to £22m in the year ahead. IT changes driven by legislation such as Mifid and Mifir contributed to these costs.
Most of the costs stem from the FCA’s operating costs, or ongoing regulatory activity. This has gone up 5 per cent over the year from £479m last year to £502.9m.
Staff costs have gone from £279.9m to £316.8m, while enforcement costs have fallen from £10.7m to £8.3m.
Overall, the FCA says the increase in its budget has been driven by taking on responsibility for supervising the consumer credit market, as well as changes to accountability rules and the mortgage credit directive.
FCA acting chief executive Tracey McDermott says: “Over the next year we will continue to embed a sustainable approach to regulation in everything we do.
“The majority of our resources remain devoted to our core business and today we have set out the outcomes we want our work to achieve. Transparency is important to us, and this plan will give all stakeholders an understanding of our focus for the year ahead.”