Advisers in the health and protection insurance markets face a 10% rise in Financial Conduct Authority (FCA) fees for the current financial year, the regulator has revealed.
Intermediaries operating in the A.19 general insurance mediation fee block, which includes the health and protection sectors, will see their contribution to the regulator’s annual budget rise by £3.4m to £38.1m.
The FCA also expects the number of intermediary firms operating in the general insurance mediation sector to fall by around 2% from 12,183 in 2023-24 to 11,956.
This could mean firm’s fees will increase by more than the expected 9.8%. However, the FCA also expects income, which decides the value of fees paid by each firm, in the sector to rise by around 3.3% from £20.5bn to £21.2bn.
As a result, it expects the fee rates to increase for each firm by around 6.2%.
Rising funding requirement
The £3.4m increase for A.19 firms is part of a 10.7% or £73.2m overall increase in the FCA’s operating cost to a total of £755m for the 2024-25 financial year that was announced in its business plan last month.
Reasons for the increase to the fee block include costs of £1.9m associated with the advice-guidance boundary review in the consumer investment market, which the FCA said “will benefit insurers and asset managers, as well as financial advisers”.
Expanded regulation of stablecoins and cryptoassets as decided by Treasury is adding a further £6.4m to the FCA’s operating costs which the regulator is sharing among all regulated firms.
“As the threat posed by money laundering and financial crime in this sector may affect the whole market, we propose to spread the cost across all fee-blocks,” it said.
However, the FCA estimates it will recover around £2m from firm ins the A.19 fee block for the 2023-24 financial year, which will mean a rebate of approximately 5.3% to firms from their final bill.
The minimum fee that all firms registered in the A fee blocks must pay will also increase by £250 to £1,750 for 2024-25, and that is then expected to rise to £2,000 next year and £2,200 a year later.
The FCA has an online fees calculator so firms can assess the impact of its proposals and which will enable them to estimate their fees for 2024/25.
The fees consultation is open until 14 May.
