The regulator wants to divide the fee-block for principal firms in two, according to a new consultation paper.

Under the plans shared in the ‘Regulatory fees and levies: policy proposals for 2024/25’ consultation paper the regulator plans to split the A.10 fee block into a A.10A for dual-regulated firms and A.10B for solo-regulated firms. 

The FCA added that some firms in the planned new A.10B block may see “significant upwards adjustments”, while other may fee a reduction in fees.

The regulator said it would address any concerns on fee increases by considering transitional provisions.

The new A.10A block would see a broadly unchanged tariff base.

The FCA said that its annual funding requirement for 2023/24 is £681.8m, a 8.5% increase from 2022/23.

In the consultation paper the FCA also said that it plans to increase application fees from April after holding rates in 2023/24 due to inflationary pressures faced by firms at the time.

The regulator also plans to resume increases to its minimum and flat rate fees, which were also held in 2023/24. Minimum flat fees will rise to £1,750 in 2024/25 and will continue to increase to £2,200 in 2026/27.

The FCA also addressed some changes it plans to make to widen the definition of ‘relevant business’ to include business conducted with all consumers eligible to complain to the Ombudsman Service, rather than just consumers as it is currently defined. This would enable micro and small business, small charities and trustees of trusts with a net asset value of under £5m to become eligible complainants from April 2025.

The change would affect how levy contributions are allocated to each firm, with firms paying slightly more or less than currently depending on how much business they do with different types of eligible complainants.

The regulator said: “We expect the overall impact of the change would likely be minor on many firms, while more fairly reflecting the burden that all in-scope firms place on the FOS.”

In 2023/24 firms subject to the compulsory jurisdiction of the Ombudsman Service are due to contribute £106m in fees.

The FCA’s predecessor, the FSA, last consulted on the relevant business definition for the calculation of FOS fees in November 2000. At the time some firms argued it would be difficult for them to identify income received from business conducted with businesses eligible to complain to the Ombudsman. This would, in the firms’ view, result in the inaccurate calculation of levies.

However, in the latest consultation paper the FCA said it should now be easier for firms to identify relevant business with small and medium sized enterprises now eligible to complain to the Ombudsman.

Financial Planners can respond to the consultation paper on the FCA website.