FCA Handbook - FEES 5.3 The general levy

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FEES 5.3 The general levy

Each financial year, the FCA and FOS Ltd will consult on the amount of the annual budget of the Financial Ombudsman Service which is to be raised by the general levy.

For the purposes of the general levy, a firm will fall into one or more of the industry blocks set out in FEES 5 Annex 1R depending on the business activities which it conducts.

When identifying the relevant industry block(s), the TP firm, TA EMI firm, TA PI firm or TA RAISP firm must identify the activity (or activities) in FEES 5 Annex 1R that most closely matches that for which that firm is treated as having Part 4A permission.

The FCA will determine, following consultation, the amount to be raised from each industry block. This will be based on the budgeted costs and numbers of Financial Ombudsman Service staff required to deal with the volume of complaints which the Financial Ombudsman Service expects to receive about the firms in each industry block.

FEES 5 Annex 1R sets out the fee tariffs for each industry block.

The FCA will specify a minimum levy for firms in each industry block.

A firm must pay to the FCA a general levy towards the costs of operating the Compulsory Jurisdiction of the Financial Ombudsman Service.

Under the standard terms, VJ participants will be required to pay to FOS Ltd an amount calculated on a similar basis towards the costs of operating the Voluntary Jurisdiction of the Financial Ombudsman Service, see FEES 5 Annex 2R. FOS Ltd will be responsible for invoicing and collecting this amount.

The FCA will calculate a firm's general levy under the Compulsory Jurisdiction as follows:

(1)
identify each of the tariff bases set out in FEES 5 Annex 1R which apply to the firm for the relevant year;
(2)
for each of those tariff bases, calculate the sum payable in relation to the relevant business of the firm for that year (except industry blocks 2 and 4, in which case calculate the sum payable for that year) in accordance with FEES 5 Annex 1R;
(3)
add together the amounts calculated under (2).

A VJ participant which becomes subject to the Financial Ombudsman Service part way through a financial year must pay a proportion of the annual levy required by FEES 5.3 and FEES 5 Annex 2R, to be calculated as follows:

(1)
a VJ participant joining during the first quarter of the financial year will pay 100% of the annual levy;
(2)
a VJ participant joining during the second quarter of the financial year will pay 75% of the annual levy;
(3)
a VJ participant joining during the third quarter of the financial year will pay 50% of the annual levy; and
(4)
a VJ participant joining during the fourth quarter of the financial year will pay 25% of the annual levy.

For the purpose of FEES 5.3.6 R and FEES 5.3.8 R, a member of the Society of Lloyd's or a managing agent at Lloyd's will not in that capacity be treated as a firm. But the Society of Lloyd's will pay a general levy in respect of Lloyd's insurance business conducted with eligible complainants.

For the purpose of FEES 5.3, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under FEES 5 Annex 1R, are references to the firm's total amount of annual income reported in accordance with FEES 4 Annex 1AR Part 3.

Schedule 6A to the Act sets out a procedure to enable the FCA to cancel or vary the Part 4A permission of a person who it appears to the FCA is not carrying on a regulated activity. Paragraph 5 of that schedule sets out a procedure for annulment of cancellation or variation of Part 4A permission in specified circumstances. Where the FCA grants an application for annulment, paragraph 6 of Schedule 6A sets out its effect. In particular, the cancellation or variation of Part 4A permission is treated as if it had never taken place. As a result of the effect of annulment under Schedule 6A, the general levy and any other levy provided for under this chapter applicable to the person, in relation to the period during which the person’s Part 4A permission was cancelled or varied apply to the person, unless the exemption in FEES 5.1.4R applies.