Application and transaction fees form a relatively low percentage of the total regulatory fees and levies paid by firms. Nonetheless the principles behind some of the proposed changes need challenging. A particular concern is the proposed transaction fee under the senior managers regime. We believe the FCA should defer further discussion of this proposal until it provides more information and improves the applications process.
Overall, the FCA’s proposals appear to over protect the regulator from the effects of inflation. Our view is that it should meet the mid-range of the original target of 50-90% recovery rate, rather than the 82% proposed.
The forecast drop in regulatory fees and levies revenue of 20% for 2020/ 2021 should not be clawed back from existing fee payers in 2021/ 2022. The FCA should already be cutting its costs to adapt to this.
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