Advisers operating in the health and protection insurance market will see their contribution to the Financial Conduct Authority (FCA) budget rise by 10.4% in the 2023/24 financial year.
The rise comes as the FCA is increasing its annual funding requirement to conduct regulatory activities by £53.3m (8.5%) to £684.2m – including £5.3m for the Consumer Duty.
Intermediaries within the general insurance distribution A.19 classification, which includes health and protection insurance advisers, will see their funding requirement rise by £3.3m to £34.7m for the coming year.
Advisers will see the rate for their FCA fees rise by 7% to £1.811 per thousand pounds of annual income over £100,000.
In its CP23/7: Regulatory fees and levies paper, the regulator predicted the number of firms in the A.19 fee block would dip slightly to 12,511 from 12,588 in 2022/23, but it expects income for the group to grow by 4.4% to £20.2bn.
However, the FCA has frozen all minimum fees for 2023/24, which means health and protection advice firms will again pay the £1,500 minimum fee.
“In our November 2022 fees policy consultation paper, we proposed to freeze all minimum and flat-rate fees for 2023/24, to ease the pressure on firms, particularly smaller firms, while inflation is substantially elevated. All respondents who commented supported this,” the FCA said.
It is also freezing application fees for new firms for the same reasons.
£5.3m for Consumer Duty
The increase to the regulator’s overall annual funding requirement includes a £52.4m rise in the fees it is collecting from the industry as a whole, taking its fee income up to £633.9m.
Included within the higher budget, the FCA has added £12.7m to support its Future Regulatory Framework implementation and £5.3m for the Consumer Duty programme.
Both projects had no funding requirement in 2022/23.
The FCA has however halved the amount required for its own internal transformation programme which cost £10m in 2022/23 but will need a further £5m over the coming 12 months.
“To ensure the FCA is adequately resourced to manage its expanding remit, to cover inflationary pressure and to meet the policy opportunity provided by the transfer of previously retained EU financial services law into our regulation, we will be increasing our funding requirement to £684.2m,” the regulator said.
FOS levy
Fees for the Financial Ombudsman Service (FOS) will remain largely unchanged for health and protection sector advisers, this is despite the ombudsman’s budget being trimmed by 20%.
The FOS final budget of £234.2m for 2023/24 is being cut by £57.5m from £291.7m.
However, those in the general insurance mediation fee block will see their contribution rise by 2.6% to 88p per £1,000 of relevant business annual income.
FOS expects this to raise £10,078,326 over the year, up slightly from 2022/23 and contribute 9.5% towards its annual funding, up from 9.4%.