CII responds to FCA regulatory fee proposals
The UK’s Financial Conduct Authority has proposed a freeze in fees for some firms, while others will pay more
The suggestions, which cover the financial year 2020/21, were published in a regulated fees and levies rates proposal document on 7 April. The FCA suggests that smaller firms should benefit from a freeze on regulatory fees, although some other firms – which would include advisers, dealers and brokers – would see a slight increase of 1.7 per cent in fees compared with the previous financial year. Some other lines of insurance, such as general and life, will potentially see larger increases.
The FCA has also suggested that the payment period for firms that are required to pay minimum FCA fees should be extended to 90 days.
Keith Richards, the UK Chartered Insurance Institute’s Managing Director of Engagement, expressed a mixture of skepticism and approval regarding the proposals. “These are unprecedented times for every profession,” he said. “The FCA’s approach is understandable, but the 7.1-per-cent increase in regulatory fees for general and life insurance firms will add to the financial burden these businesses face as they try to help customers and claimants in their hour of need.
“This is a turbulent time for many small and medium-sized insurance businesses, with the true financial impact uncertain for most. The ability of the profession to deliver advice to consumers and businesses about the risks they face and the cover they need will be essential during the coronavirus outbreak, and there has never been a more important time for government and regulators to support the market, including consumer messaging and engagement.
“Insurance brokers have a key role to play in helping firms and customers plan for the future in these unprecedented times. As a result, we welcome the freeze on minimum fees for small firms, and the relatively low increase in fees for general insurance mediation across the piece of three per cent.”
The proposals have only been published as a consultation paper, to which stakeholders are free to respond until 19 May.