FSA - CP12/2 - Regulatory fees & levies: Money Advice Service cost allocation
Q1. Do you agree that we should use the consumer-usage data that the MAS collects to allocate money advice costs to fee-blocks? If you do not agree, please give your reasons and suggest an alternative.
We have a nuanced position in relation to this proposal. On one hand, we are in favour of the proposal since it redresses the balance away from deposit-takers which – at almost one third – have paid disproportionately towards MAS costs thus far. On the other hand, however, we have some misgivings about the proposed basis for MAS fee allocation.
We would suggest that the proposal that fees should be based on usage does not appropriately reflect the ways in which MAS incurs its costs nor how it seeks to proactively improve the financial capability of the public and influence the financial capability agenda. Both the latter two of these form two of the four “strategic themes” set out in the MAS Business Plan for 2013/14.
For instance, while mortgage finance is clearly the most popular aspect of the MAS resource on the website, this does not reflect either the areas of financial services in which MAS incurs its costs through the development of information resources, nor the areas which MAS seeks to promote in its wider agenda of promoting financial capability. More important in the latter respect, for example, might be information relating to pensions, annuities and saving for retirement which are all key areas of concern for the financial well being of the public but are not reflected in the website-based cost allocation. Indeed, it would seem that to charge on the basis of those areas that are accessed on the website actually runs counter to MAS’s overall strategy since those areas consumers are already engaged in are those they are most likely to search for information on.
We should therefore suggest that fees should be allocated to reflect both the usage of MAS services and MAS’s proactive work to improve financial capability and influence financial capability policy.
Q2. Do you agree with how the consumer-usage data has been mapped on to the fee-blocks? If you do not agree please give your reasons and suggest an alternative.
We understand that there are problems with bringing OFT-regulated consumer credit companies into this framework and we understand that once consumer credit regulation has been transferred to the FCA in 2014 this will be returned to.
However, we remain firmly of the view that consumer credit providers should be required to contribute to MAS costs, particularly since our members lend ethically in communities in order to repair some of the problems created by non-mainstream consumer creditors.
Q3. What should be the minimum levy paid by a firm that is in at least one of the fee-blocks where costs are allocated?
We agree that is seems sensible, should the overall proposal be pursued, that those in contributing fee-blocks should retain the £10 minimum fee.
Q4. Should firms that are in at least one of the fee-blocks where costs are not allocated, who exceed the size thresholds, pay higher minimum fees?
This would seem sensible. We suggest, however, that the fact that such a measure is suggested reflects the wider problems with the proposed cost allocation system. We would prefer FSA to return to the basis of the cost-allocation.
The full response can be downloaded on the right hand side.