The common question we receive when firms are deciding whether to get authorised or not as an FCA regulated firm is how much will it cost?

‍

‍

The answer is never really that clear as the FCA is not the only fee you need to think about.

How much will it cost to get FCA authorised?

Firms generally go through the trouble of finding a suitable consultancy firm, that is quoting a reasonable price to enable them to demonstrate to the FCA that they are willing, organised and ready for authorisation.

The last thing you may consider is the fees you will have to pay to submit the application and continue to hold the licence thereafter.

‍

‍

We have collated the information below to help your firm make an informed decision at the inception stage of an application; instead of being hit with a hefty bill once committing to the process.

The FCA is a self-funded organisation. What this means in practice is that the FCA charges a fee and/or levy to the firms it authorises, to fund the costs of delivering its priorities and objectives. The FCA will set out its funding requirement in its annual business plan each year, which firms should expect to increase in line with inflation. So the fees will only get steeper!

There are three types of fees charged by the FCA

1. Authorisation fees
2. Changing or varying your permissions
3. Annual or periodic fees

Authorisation fees

Generally, the amount you will pay is considered on the complexity of the application and the types of permissions being sought

The minimum fee you will be expected to pay on submission is £1,000; for example, if you are a consumer credit firm applying for permission for debt counselling and debt adjusting as an ancillary activity to the firm's main business.

However, this can substantially increase if the application is deemed novel or complex due to the nature of the products being offered and the risk to the consumer. For example, Mifid investment firms should expect a fee of £10,000 when submitting their application.

The application fee is required by card payment at the time of submission in Connect (the FCA’s application platform).

Changing or varying your permissions

When authorised by the FCA, any activities falling outside the scope of your permissions will need to be applied for. This is called a Variation Of Permission (VOP). This does not come free, and so permissions during authorisation should be considered carefully. If you do not use the permission you can lose it, however, if you fail to apply for permission on authorisation, you will need to pay for it.

The FCA places firms in fee blocks. If a firm varies permission and moves into a new fee block it will become subject to the new fee calculation.

We have provided an example below:

• Firm adds permission but doesn’t move out of the fee block it is in already£500 (category 2 fee)
• Firm adds permission and moves into a new block after varying 50% of the fee for a new firm applying for that permission.
• Firms vary its permissions and moves into two or more new fee blocks

The higher of any relevant fees

Where you are cancelling a permission it already holds, the FCA will not charge for this application.

Annual or periodic fees

Once authorised by the FCA all firms are required to pay periodic (i.e. quarterly) or annual fees. Once issued with a statement a firm has 30 days to pay the amount in full to the FCA. Annual fees can be paid via transfer, online payment or cheque.

A firm’s first annual fee payment will be based on the forecasted projections it provided during the authorisation application. That is why it is incredibly important for firms to get this right when projecting their monthly cash flow.

The FCA also collects fees and levies to pay for the costs of other regulators a firm may be subject to. The general fees for all firms will be:

1. Financial Ombudsman Service = £200 per year for handling complaints. Firms should remember that the FOS charges a case fee of £750
2. Financial Compensation Service Scheme = 3% of regulatory turnover or £1,500 as a base fee

Other fees a firm may be subject to based on its business model:

• Payment Services Regulator
• Prudential Regulation Authority
• Money and Pensions Service
• Financial Reporting Council
• Illegal Money Lending Team

FCA records fees in its fees manual.

The FCA will invoice the firm and allow for 30 days for the payment to be received. Firms can calculate the annual fee by using the FCA fee calculator.