The Financial Conduct Authority (FCA) has proposed an annual funding requirement (AFR) of £640.1m ($837m, €769m) for the 2022/23 financial year.
This is a 4.3% rise from 2021/22, where it came in at £613.7m.
The budget comprises of ongoing regulatory activities (ORA) of £617.4m, scope change of £10.4m, transformation programme of £10m and £2.3 for the consumer harm campaign.
In the breakdown, the A.13 fee block, which consists of advisers, arrangers, dealers and brokers, will face a 5.2% fee increase to £86.5m for 2022/23.
The number of firms in the segment has decreased by 3.3% to 11,901 from 12,301 in the 2021/22 financial year.
Overall, the FCA said it currently estimates the retained penalties from 2021/22 will be £49.1m (£50.5m in previous year).
For the A.13 segment, estimated 2021/22 retained penalties to be applied to benefit of fee payers will be £4.2m. Estimated rebate applied to 2022/23 fees for A.13 will be 4.9%.
During the FCA fee consultation, the regulator said that the Financial Ombudsman Service’s (FOS) budget for the 2022/23 financial year will go up to £291.7m, from £260.2m.
The levy on advice firms as a percentage of the FOS’ total levy will be 2.34%.
The Department for Work and Pensions (DWP) has told the UK regulator that the total sum it must collect for the Money and Pensions Service (Maps) in 2022/23 is £159.4m.
As for the Maps levy, advice firms will pay £1.7m for the money guidance allocation, a 6% drop from last year.
But advisers will pay £5.7m for pension guidance, up from £2.4m in 2021/22.
The FCA said the fees will be finalised in June after its consultation.
Three year plan
In other news, the FCA has unveiled a three-year plan to strengthen its focus, including harm caused by authorised firms to consumers.
The watchdog will create 80 roles in a bid to shut down firms that do not meet minimum regulatory standards.
Nikhil Rathi, chief executive at the FCA, said: “Our new strategy enables the FCA to respond more quickly to the rapidly changing financial services sector.
“It will give us a foundation to continuously improve for the benefit of our stakeholders, and respond swiftly to economic and geopolitical developments.”
The FCA said that the regulator will focus on three areas:
- Reducing and preventing serious harm;
- Setting and testing higher standards; and
- Promoting competition and positive change.
The UK regulator said that, to reduce and prevent serious harm, it will deal with problem firms that do not meet minimum standards; improve the redress framework, reduce harm caused by firm failures, increased oversight of appointed representatives, reduce and prevent financial crime and deliver assertive action on market failures.
In a bid to set and test higher standards, the FCA will put consumers’ needs first, enable consumers to help themselves, have a strategy on environmental, social and governance (ESG) priorities, and minimising the impact of operational disruptions.
Lastly, to tackle its third focus, the UK regulator will prepare financial services for the future, strengthen the UK’s position in
wholesale markets and shape digital markets to achieve good outcomes.
‘Welcome step forward’
Anne Fairweather, head of government affairs and public policy at Hargreaves Lansdown, said: “The FCA has set out its focus for the next three years, rightly looking to reduce consumer harm, setting higher standards and promoting competition, putting metrics against these aims for the first time. This is a welcome step forward.
“In particular we welcome the fact that the FCA sees informed and empowered consumers as an important defence against bad conduct. Overtime consideration needs to be given as to how this aim is measured. Data from firms, collated under the consumer duty, could really drive this ambition.
“We would also want to see a wider ambition that consumers improve their financial resilience. Preventing harm, such as from investment in inappropriate high risk products, is the first step here.
“But over the coming three years, using the consumer duty as a driver, we believe that firms can and should do more to improve the outcomes for consumers, ensuring that they are building their resilience over time.”