FCA Regulatory Fees and Levies Rates Proposals 2022-23
Friday 5 January 2024
FCA Regulated Fees & Levies Consultation Outcome – Update July 2022
The FCA has published the outcome to its fees and levies rates consultation for 2022/23, with the initial consultation proposals detailed in this briefing. This update sets out the final fees and levy rates to be paid by credit unions for 2022/23.
As proposed in the consultation, the FCA has decided to increase the minimum periodic fee paid by credit unions of all scales by approximately 5.5%. The final minimum periodic fee to be paid to the FCA by credit unions according to their level of MELs* are shown in the table below, with a comparison to the previous year’s minimum fees.
| Level of MELs | Minimum Fee 2021/22 | Minimum Fee 2022/23 |
| Up to £0.5m of MELs | £92 | £97 |
| Up to £2m of MELs | £310 | £327 |
| Over £2m of MELs | £574 | £606 |
Credit unions with greater than £10m Modified Eligible Liabilities (MELs) will also pay a tariff-based periodic fee to the FCA on MELs above £10m.
Credit unions are also required to contribute a minimum fee towards the Financial Ombudsman Service (FOS) General Levy of £55, the same level as the previous year. Credit unions with consumer credit permission are required to contribute a second minimum fee towards the FOS General Levy of £35. In addition, all credit unions are required to contribute a minimum fee of £10 towards the Money Advice Levy.
Credit unions may be required to make further tariff-based levy contributions if they have more than £10m MELs or a high value of consumer credit lending. Credit unions can produce a breakdown of the full set of regulated fees and levies they will be required to pay for 2022/23 to both the PRA and FCA using the FCA fees calculator.
The FCA has published its annual regulatory fees and levy consultation paper for 2022/23. The consultation paper contains proposals and projections of the regulatory fees and levies under its jurisdiction for the ahead. This briefing lists all the proposed fees and levies applicable to the credit unions.
The fee quoted in this briefing are proposals published by the FCA in April 2022, with the final fee levels be announced in July 2022 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 9th May.
ABCUL will issue a further update once fees are confirmed in the summer. If you would like to predict the regulatory fees payable by your credit union to the FCA for 2022/23, the regulator provides a fees calculator facility, based on the fees and levies consultation paper.
Please note that the that there is currently an issue with the FCA fees calculator displaying the incorrect FCA minimum periodic fee proposed for credit unions with over £2m of MELs. The correct proposal for the minimum fee, as quoted below, is £606. We have been advised that the FCA are aiming to correct the error by the time that annual fees are finalised in June.
Annual Funding Requirement
The overall Annual Funding Requirement (AFR), that funds the operations of the FCA, is proposed as £640.1m for 2022/23. This is an increase of 4.3% compared to the AFR for 2021/22. 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 an uplift of the ORA, the total the baseline running costs of the FCA, in line with inflation.
Removal of Fee Period Extension
For the last two financial years, small and medium firms received an extension for the period in which they needed to pay their fees from 30 days to 90 days. This was to account for the financial impact of the Covid-19 pandemic. The FCA proposes to return to a 30-day period to pay regulatory fees following invoice for 2022/23.
FCA Periodic Fees
Following a consultation at the end of 2021, the FCA are going to proceed by restructuring the minimum fees paid by a range of firms, including deposit-takers and consumer credit firms. As previously announced, credit unions will be excluded from the rebasing of minimum fees, in support of their social mission. The FCA will be implementing this concession by creating a new concessionary minimum fee rate for credit unions (with over £2million in MELs), that used to pay the same minimum fee as other deposit-taking firms.
Though credit unions are exempt from the large increase in fees that will be seen by other firms, the FCA are still proposing an increase in fees in line with the ORA uplift for all categories of firm, including credit unions. This is following a two-year freeze for minimum fees that was implemented by the FCA help support firms with the impact of the Covid-19 pandemic.
The increase in minimum periodic fees proposed for credit unions in 2022/23 is shown in the table below. The applicable fee band for each credit union is dependent on the level of credit union’s modified eligible liabilities*.
| Level of MELs | Minimum Fees 2021/22 | Proposed Minimum Fees 2022/23 | Proposed Increase |
| Up to £0.5m of MELs | £92 | £97 | £5 (5.4%) |
| Up to £2m of MELs | £310 | £327 | £17 (5.5%) |
| Over £2m of MELs | £574 | £606 | £32 (5.6%) |
The largest credit unions will also continue to pay a levy tariff rate on MELs over £10 million, which is projected as £14.480 per £million MELs above £10m. This would be a slight decrease from the current year tariff levy rate of £14.4772 per £million MELs above £10m.
These credit unions will also get a rebate as a result of 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 9.8% of tariff rate fees.
Financial Ombudsman Service General Levy
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 that this minimum fee 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 2022/23 is £1.126 per £thousand of consumer credit lending income above the £250,000 threshold. This is a slight decrease on the current tariff rate of £1.177 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 a MELs above £10 million. The Money Advice levy tariff rate for deposit takers is projected as £0.949 per £m of MELs above £10m for 2022/23. The projected tariff rate is lower than the current year’s tariff rate of £1.114 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 £3.079 per £m of MELs above £10m – a significant increase on the current tariff rate of £1.337 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 consumer 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 £190.45 per £m of consumer credit lending over £2 million. This projected rate is higher than the current tariff rate of £163.44 per £m of consumer credit lending over £2 million.
Devolved Authorities Debt Advice Levy
As with the debt advice levy, credit unions are only required to contribute towards the levy for debt advise provided by the devolved authorities for consumer credit lending above £2m.
The projected devolved debt advice levy rate for credit unions is £24.39 per £m of consumer credit lending above £2m, which presents a slight decrease on the current tariff rate of £26.88 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.