Advisers in the health and protection insurance sectors face a 3.5% increase in the fees they have to pay to the Financial Conduct Authority (FCA) during 2022/23.
Firms operating in these markets, which come under the general insurance intermediation category, have seen their contribution to FCA funding increase by £1.1m to £31.5m, up from £30.4m in 2021/22.
However, advisers may see their share of the increase exceed the 3.5% rise as the FCA expects the number of intermediaries operating in the block to dip by 1.7% from 12,812 to 12,588.
Staggering minimum fee increase
Overall, the regulator is only increasing its annual funding requirement (AFR) by 2.8% or £17.2m from the £613.7m it needed in last year.
This is after it trimmed the increase to its AFR and is now budgeting £630.9m for the current financial year, down from its initial expectation of £640.9m
It has also given smaller firms an extra year to stagger the increase of its minimum fees which all firms must pay.
This year minimum fees will be £1,500, followed by £1,750 in 23/24, £2,000 in 24/25 and then £2,200 in 25/26, instead of the original plan to be £1,750 this year and hit £2,200 in 24/25.
The regulator noted that it had received a significant amount of feedback that it should not increase fees, especially minimum fees for small firms.
“One respondent commented that, while the FCA’s fees might not look material in relation to other costs, they caused concern for smaller fee-payers when all the costs are taken together collectively,” it said.
In response, the FCA said: “We recognise that this is still a difficult period for businesses, especially small businesses.
“Therefore, although these fees did not form part of the current consultation, we have decided to extend the phased restructuring of minimum fees for the A and CC fee-blocks over four years.
“This has the effect of reducing the AFR by £9.1m. Such a material reduction represents a challenge to us and we will continue to keep our costs under close review.”
AR fees
The regulator has also eased the burden on costs for appointed representatives (ARs) and introducing ARs (IARs).
It has since decided it would be more consistent to treat the AR and IAR fees in line with its approach to other flat rate fees and increase them by 6.2% only to take account of inflation, meaning from £250 to £266 for ARs and from £75 to £80 for IARs.
“We are reviewing our long-term funding arrangements for developing policy towards ARs and ongoing regulation and enforcement, where we expect to intensify activity in line with our published business plan and strategy,” the FCA said.
“We will review the options for cost recovery in the fees policy CP that we expect to publish in November.”