The Financial Conduct Authority Consultation Paper – Regulatory fees and levies: policy proposals for 2014/15Print publication
Financial Conduct Authority – Consumer Credit
The Financial Conduct Authority (the FCA) will take over the regulation of consumer credit from the Office of Fair Trading (the OFT) on 1 April 2014. The FCA has made proposals, in the regulatory fees and levies: policy proposals for 2014/15 (the Consultation Paper), in relation to its fees when the FCA’s consumer credit regime comes into effect.
Both interim permission-holders and new applicants will need to pay application fees and periodic fees.
Proposed consumer credit application fees
Please refer to Table 2.1 from the Consultation Paper which provides full details as to how the FCA proposes to categorise different forms of consumer credit. A summary is provided below.
Applications for limited permission
Firms applying for limited permission will be charged £100 if their consumer credit income is up to £50,000 and larger firms will be charged £500. There will be no charge if firms apply for further limited permissions.
Applications for full permission
Firms are categorised into ‘straightforward’, ‘moderately complex’, ‘complex’, or ‘very complex’. Firms applying to become a consumer credit lender will pay the appropriate fee depending on the type of business they intend to transact. For example, complex fees of £10,000 will be paid by payday lenders, logbook lenders and home collected credit agencies. All other lenders will pay the moderately complex fee of £5,000, including peer-to-peer lenders. Credit reference agencies will be categorised as very complex. There will be a charge if firms apply for further full permissions.
Proposed periodic fees
The FCA has proposed two fee-blocks:
- Fee-block CC1: firms with limited consumer credit permissions
- Fee-block CC2: firms with full consumer credit permissions
The FCA is proposing to use consumer credit income as the tariff base for both fee-blocks. The FCA will consult on the final rates in the fees consultation paper that it intends to publish in March 2014.
Firms below a certain threshold will pay a minimum fee. Above the threshold, they will pay the highest minimum plus a variable rate. As it stands the FCA has set the minimum fee threshold above which a firm pays variable fees at £250,000 of consumer credit income for both consumer credit fee-blocks.
Indicative minimum consumer credit fees:
Fee-block CC1 (limited permission):
Up to £50,000 – £250
>£50,000 to £100,000 – £400
>£100,000 to £250,000 – £500
Fee-block CC2 (full permission):
Up to £100,000 – £500
>£100,000 to £250,000 – £1,000
Indicative variable fees
Firms whose income takes them above the minimum fee threshold will pay a variable fee in addition to the highest minimum fee. A larger firm in fee-block CC2 would therefore pay £1,000 plus the variable rate per £1,000 or part £1,000 of income above £250,000. The FCA estimates the following rates:
- Fee-block CC1: £0.23 per £1,000 or part £1,000
- Fee-block CC2: £0.30 per £1,000 or part £1,000
It is important to note that all payday lenders, logbook lenders and home collected credit agencies regardless of their size will be required to pay the complex fee of £10,000 when making an application to become a consumer credit lender regulated by the FCA. Periodic fees will however be dependent on a firm’s consumer credit income.
The deadline for responding to the Consultation Paper is 6 January 2014 and firms are encouraged to respond with any comments or concerns relating to the FCA’s proposals. The FCA will consider comments and publish feedback along with its rules in February or March 2014.