Intermediaries in the health and protection insurance markets will see a steeper drop in the fee rate payable to the Financial Conduct Authority (FCA) than previously expected due to soaring revenues.
In its final fee assessment for the 2025-26 financial year, the FCA revealed it is dropping the rate charged to advisers in the A.19 General insurance distribution fee block, which includes health and protection intermediaries, by 8.3%.
It means advisers will be paying around £1.59 per thousand pounds of annual income this year compared to £1.73 in 2024-25, which is notably lower than the previously anticipated £1.72.
The regulator said this was due to income within the fee block growing by far more than previously anticipated.
In its April update the FCA expected revenues within the sector to grow by 3.3% to £23bn in the 2025-26 year.
However, in its PS25/8 policy statement published last week, it is now expecting revenues to soar by 11.5% to hit £24.8bn, more than enough to compensate for the £800,000 increased funding required from the fee block.
“Despite the annual funding requirement increasing by 2.4%, the 11.5% increase in tariff data has resulted in the fee rate being reduced by 8.3%,” the FCA said.
The FCA figures also showed the number of firms operating in the fee block dropped by 5.1% to 11,105 – with almost 370 more firms than expected leaving.
Overall, the FCA set its annual funding requirement (AFR) for 2025/26 at £783.5m which is a 2.5% increase from 2024-25, but below the 6.15% increase of the previous year.