FCA Fees & Levies 2024/2025

The FCA has published its annual regulatory fees and levy consultation paper for 2024/25. The consultation paper contains proposals and projections for the regulatory fees and levies under its jurisdiction for the year ahead. This briefing lists all the proposed fees and levies applicable to the credit unions. The previous consultation which closed in January 2024 can be found here.

The fees quoted in this briefing are proposals published by the FCA in April 2024, with the final fee levels to be announced in July 2024 following stakeholder feedback on the consultation. Subsequently, ABCUL will respond to the annual FCA fees consultation on behalf of its membership. If you have any feedback on the proposed fee levels and structure, please share this by getting in touch at policy@abcul.org by 5pm on the 8^th May.

ABCUL will issue a further update once fees are confirmed in the June/July 2024. If you would like to predict the regulatory fees payable by your credit union to the FCAA for 2024/254, the regulator provides a fees calculator facility, based on the fees and levies consultation paper. The consultation paper contains proposals on the underlying principles of the fee system and their proposed approach to the following years’ fee rates and introducing fee structures where new groups of firms have been brought into the FCA’s regulatory scope. They have also detailed amending rules in the FEES manual of the FCA Handbook to take account of legislation changes and clarify FEES rules that fee-payers have found ambiguous or difficult to follow.

Annual Funding Requirement

The overall Annual Funding Requirement (AFR), that funds the operations of the FCA, is proposed as £722.6m for 2024/25. This is an increase of 8.75% compared to the AFR for 2023/24. The AFR is funded via the periodic fees paid by regulated firms including credit unions. A large driver in the increase of the AFR is the extension of regulatory responsibility projects (described in previous years as scope change projects) and exceptional projects – these recover the costs of additional work the FCA undertake to implement government initiatives and legislation. These project costs do not recur beyond the life of the projects. The extension of regulatory responsibilities has resulted in new types of firms being monitored by the FCA.

FCA Periodic Fees

The consultation proposes that the minimum periodic fees proposed for credit unions in 2024/25 will increase by approx. 8% in the tariff rates, as detailed in the table below. The applicable fee bank for each credit union is dependent on the level of credit union’s modified eligible liabilities.*

The largest credit unions will also continue to pay a levy tariff rate on MELs over £10 million, which is projected as £16.434 per million MELs above £10m. This would be a increase from the current year tariff levy rate of £14.836 per million MELs above £10m.

These credit unions will also get a rebate as a result of the penalties collected by the FCA over the previous year, but this rebate will only be paid on the tariff rate fees, not the minimum fee. The rebate is currently projected at 5.8% of tariff rate fees.

Financial Ombudsman Service General Levy

The FCA are consulting on the 2024/25 general levy rates for firms in the Compulsory Jurisdiction (CJ) of the ombudsman Service.

This year the FOS have asked the FCA recover £70m through the general levy, which is 34% less than the £106m it was asked to recover in 2023/24.

The FCA intend to make rules setting the general levy fee-rates in June 2024, following this consultation.

It is proposed that credit unions will continue to pay the same flat rate annual levy fee to the Financial Ombudsman Service of £55. This levy fee is paid by all credit unions, even if they have not had any complaints cases referred to the FOS.

All credit unions with full consumer credit permission will pay an additional minimum fee toward the FOS General Levy. It is proposed this minimum fee is to remain at £35.

Further, credit unions with over £250,000 income from consumer credit lending will also pay a tariff-based levy. The levy rate projected for 2024/25 is £0.988 per £thousand of consumer credit lending income above the £250,000 threshold. This is an increase on the current tariff rate of £0.500 per £thousand of consumer credit lending income above £250,000.

Money Advice Levy

Credit unions required to contribute to the money advice levy on a tariff-based rate if they have MELs above £10 million. The Money Advice levy tariff rate for deposit takers is projected as £0.947 per £m of MELs above £10m for 2024/25. The projected tariff rate is higher than the current year’s tariff rate of £0.897 per £m of MELs.

The minimum fee payable by all credit unions for the money advice levy is proposed to remain at £10.

Pensions Guidance Levy

Credit unions with greater than £10m in MELs also contribute towards the pensions guidance levy. The pensions guidance levy tariff rate for deposit-takers this year is projected as £2.583 per £m of MELs above £10m – a decrease on the current tariff rate of £2.393 per £m of MELs.

Debt Advice Levy

Credit unions are only required to contribute to the debt advice levy if they engage in over £2 million of consumber credit lending, meaning that the vast majority of credit unions will not pay towards this levy. The levy tariff rate for these credit unions is projected as £181.974 per £m of consumer credit lending over £2 million. This projected rate is higher than the current tariff rate of £167.76 per £m of consumer credit lending over £2 million.

Devolved Authorities Debt Advice Levy

The devolved authorities debt advice levy rates fund the work undertaken in providing debt advice to members of the public in Scotland, Wales and Northern Ireland.

As with the debt advice levy, credit unions are only required to contribute towards the levy for debt advice provided by the devolved authorities for consumer credit lending above £2m.

The projected devolved debt advice levy rate for credit unions is £29.08 per £m of consumer credit lending above £2m, which presents a slight decrease on the current tariff rate of £27.05 per £m of lending.

*Modified eligible liabilities (MELs) for credit unions is defined as deposits with the credit union (that is its share capital), less the credit union’s bank deposits (investments + cash at bank). This only refers to a credit union’s United Kingdom business only. Please see Chapter 4 Annex 1a of the FCA FEES Handbook for reference and further information.

Question 1: Do you have any comments on the proposed FCA periodic fee-rates for2024/25?

Question 2: Do you have any comments on the proposed FCA application fees for 2024/25?

Question 3: Do you have any comments on the proposed method of calculating the CJ levy tariff rates for firms in each fee block?

Question 4: Do you have any comments on our proposals for how the overall CJ levy should be apportioned?