FCA and PRA to introduce transitional rules for insurance fees

The PRA is amending the rules following the introduction of Solvency II reporting requirements.

To accommodate the Solvency II changes to insurers' regulatory returns, the FCA also plans to use the same tariff data as used for their 2016/17 fees and levies.

The changes mean that fees and levies for both the 2016/17 and 2017/18 fee years will be calculated on a consistent Solvency I basis during the transitional arrangement, based on the financial year ending during 2015.

The PRA and FSCS say that as this is data they already have, firms will not be required to provide any new data for the 2017/18 fee and levy calculation.

In a consultation paper, the PRA said: "This eliminates the risk that the proportion of fees and levies paid by Directive and non-Directive firms is significantly (and possibly unfairly) altered by the introduction of Solvency II reporting requirements until the impact of those changes has been properly assessed.

"By using data already available to the PRA and the FSCS (or the FCA as their collection agent) and that has already been validated, the potential for data quality issues in the first Solvency II reporting submissions that may lead to distortions in the allocation of fees and levies between individual insurance firms, will be reduced.

Transitional arrangements covering the 2017/18 fee and levy years only are seen is the best way of keeping the transition period to a minimum, while maintaining a realistic prospect of a new approach being developed by the end of the arrangements."