The Financial Conduct Authority says it will need £558.5m ($730m, €646m) in annual funding for 2019/20, according to a consultation paper released on 17 April.
This represents an increase of 2.7% from £543.9m in the previous tax year.
The money funds the work of the FCA; the Financial Ombudsman Service; the Money and Pensions Service; devolved authorities in Scotland, Wales and Northern Ireland; and the illegal money lending expenses of HM Treasury.
Advisory arrangers, dealers or brokers will be expected to collectively fork out £79.4m this year, a decrease of 1.1% from £80.3m last year.
In contrast, life insurers are to pay 3.4% more – with the levy rising to £44.6m from £43.2m.
It is important to note that these figures do not include any rebates as a result of regulatory penalties imposed by the FCA last year.
Putting fines to good use
Monetary sanctions imposed on the financial services industry can soften the blow, to some extent, with around £48.6m in fines retained (after expenses) last year.
Taking the penalties into account, the overall fees to be collected in 2019/20 will be £509.9m.
The FCA maintains that its financial penalty scheme ensures that fines are applied for the benefit of firms, with the exception of those that were sanctioned.
Based on the penalties imposed, different segments can expect a rebate to their 2019/20 fees.
Advisers and related firms paid £4.1m in penalties last year, meaning an estimated rebate of 5.3% for this tax year.
Life insurers were hit with £2.8m in fines, resulting in a 6.3% rebate.
Portfolio managers appeared to be the most poorly behaved in 2018/19 – with firms hit with £11.3m in penalties, which equates to an estimated rebate of 24.8% on the 2019/20 levy.
The final rebates will be published in the July 2019 policy and feedback to the consultation, which closes on 29 May 2019.
EU withdrawal
For the second year, the FCA has carved out £5m to cover additional costs related to the UK’s departure from the European Union.
The cost is to be covered by banks, insurers, fund managers and proprietary traders, as the FCA believes these types of firms will be the most affected by Brexit.
