Plans to double charges will hit small brokers hardest
Biba has blasted the Financial Services Authority for its plans to double the minimum regulatory fees it charges brokers.
The FSA is refusing to back down over plans to increase the minimum regulatory fee it charges brokers from £450 to £1,000 in 2010/11.
Despite lobbying from Biba, the FSA is sticking to the proposal originally announced in its fees and levies consultation paper in November, which will hit small brokers the hardest.
Biba’s chief executive, Eric Galbraith, said: “The overall cost of regulation is totally disproportionate in relation to the low risk posed by our members’ regulated activities, but Biba welcomes the FSA’s desire to introduce a fairer and more transparent basis upon which regulated fees are levied to individual firms.”
The sector’s largest brokers – those with an annual income of more than £192m (about 10 firms) – are also facing inflated fee increases in excess of 100%.
The FSA said that the other 98% of firms will pay less this year, but this is dependent on variable fees that are charged to firms who have annual income above £100,000 on a straight line basis.
The FSA has increased the rate it charges firms when calculating fees from £2.27 per £1,000 of annual income to £2.41 per £1,000 of annual income in its latest consultation paper, published last week.
Firms that reported more than £30.9m in annual income will see their fees increase, while those with annual income of less than £30.9m will see a reduction in the variable fee.
Overall, the FSA has increased its annual funding requirement by 9.9% for 2010/11 to £454.7m, up from £413.8m in 2009/10.
Fee block A19, which includes general insurance brokers, will pay £30.8m, compared with £35.9m last year – a reduction of 14%.
Biba said it still has a “fundamental issue” with the minimum fee and that brokers are paying fees out of line with the rest of Europe.
IIB chief executive Barbara Bradshaw said she was disappointed that the FSA did not change its mind.
Brokers have until 12 April 2010 to respond to the FSA’s consultation paper. The FSA will set final rates at the end of May.