FCA freezes 1.6% fee increase for smaller advice firms

In its proposals, released today, the FCA said that the 71% of firms "that are small enough to only pay minimum fees will see no change in the fees they pay" in 2020/21.

In its allocation across fee-blocks for 2020/21, the FCA has proposes a 1.6% rise in fees for advisers and brokers in the A.13 block to a total of £80.7m.

Home finance providers, advisers and arrangers in the A.18 fee-block will see a 3% rise in fees to £18.1m.

The FCA expects its overall annual funding requirement to increase by 5.2% in 2020/21 to £587.6m.

As well as a freeze in minimum fees, small and medium firms will have longer to pay their fees. The FCA plans to extend the period for paying fees by two months to 90 days.

This means that 89% of firms will have until the end of 2020 to pay their fees and levies. Larger firms will be expected to pay their fees under the usual payment terms.

Last week, the Association of Mortgage Intermediaries warned the FCA against "discriminating in favour of smaller firms" when considering any fee cuts during the Covid-19 pandemic.

The AMI requested that FCA considers deferring or reducing the fee costs facing firms during the coronavirus epidemic.

In a statement, the AMI said that "discriminating in favour of smaller firms is unfair on our other members".