The Financial Conduct Authority (FCA) is proposing to increase minimum and flat rate fees in stages to £2,200 by 2026/27.
After having frozen these fees in 2023/24, the regulator said in its Regulatory fees and levies: policy proposals for 2024/25 document released this morning, that it is consulting on an incremental increase on fees rising from £1,500 in 2023/24 to £1,750 in 2024/25, £2,000 in 2025/26 and then up to £2,200 by 2026/27.
The fees freeze in 2023/24 supported around 34,500 firms who pay minimum fees only.
Resuming fee increases
Explaining the reasoning behind its proposal, the FCA said: “We paused this process during 2023/24 in line with our wider freeze on minimum, flat rate and application fees.
“Now that we propose to resume increases, we will also resume the incremental uplifts in A.0, CC.1 and CC.2 fees. This will defer completion by a year from 2025/26 to 2026/27.
“Once the process is complete, we expect from 2027/28 to resume the usual uplifts to reflect the increase in our costs.”
Advisers in the A.19 block for general insurance distribution include those selling health and protection policies.
Bringing forward reporting date
Separately, the FCA announced a proposal to bring forward the current May reporting date for general and life insurers to 8 April.
Elaborating on its proposal the FCA said: “General insurers and life insurers (industry blocks 2 and 4) are treated separately to firms in other industry blocks under our rules, having to notify us of their amount of gross written premium relating to relevant business by 30 May each year, rather than the end of February.”
It explained this is because regulatory reporting for insurance business has a longer timeframe by the Prudential Regulation Authority (PRA), reflecting their implementation of Solvency II.
The FCA added to make it easier for firms reporting, it is proposing to bring forward the current May reporting date for general insurers and life insurers, to align more closely with the deadlines by which firms with a 31 December reporting schedule must report to the PRA.
It continued: “The PRA states that a 14-week period running from 31 December applies for Solvency II firms to submit their data each year, with 6 weeks extra allowed for group firms.
“In practice, this means that firms in industry blocks 2 and 4 have until 7 or 8 April each year to report to the PRA, depending on the presence of a leap year. To avoid this issue and account for potential changes to these dates in the future, the deadline for firms in blocks 2 and 4 to report to us would be the latest PRA reporting date (currently 8 April).
“This change would only apply to those firms in industry blocks 2 and 4.
“If we proceed with this change, it would apply from 2025 onwards, meaning that firms in these industry blocks would need to report to us by 8 April 2025 rather than 30 May 2025. To reflect this, we are proposing to implement the change on 1 June 2024.”
The FCA further concluded that diverging from 30 May would not create an additional reporting burden for firms.
“Where a firm reports data to the PRA through its Solvency II returns, this data is passed to the FCA (rather than us asking the firm for this information),” it added.
“We then use this in combination with data we collect directly from firms to inform the fees set out in firms’ invoices.”
Removing funeral plan providers from fee-block A.4
Finally, the regulator also proposed to remove funeral plan (FP) providers from fee-block A.4
It explained: “Before carrying out a FP contract as provider was brought into the scope of the Regulated Activities Order (RAO) from 2022 onwards, some life insurers in fee-block A.4 were able to take on permissions as FP providers.
“That permission is no longer current but it has resulted in FP providers automatically being allocated to A.4 as well as A.23.
“None have been charged in A.4 for their FP business as their fees were manually set to zero but removing the reference will automatically restrict them to A.23 as originally intended.”
