FSA to cut fees of over 10,000 small firms

The Financial Services Authority has published its Business Plan for 2009/10, which sets out its plans to hike fees for larger firms and cut fees for over 10,000 small firms.

Its proposed fees reflect the amount of resource that it plans to dedicate to different types of firms in the coming year.

The regulator classes a small firm as one with an income of less than £70,000 a year.

A small firm pays roughly £745 a year at the moment, but will see this fall to £701.

The FSA’s budget of £415m for 2009/10 reflects the cost of taking these priorities forward.

To fund its proposed plan of work, the FSA will need to increase the amount it raises from firms (the Annual Funding Requirement) by £117m.

The largest component of this increase, approximately £70m, is due to the cost of embedding and delivering higher quality supervision, especially of higher impact firms.

To support the enhancement of its supervisory process, the FSA will also be investing an additional £12m in technology and property infrastructure.

As well as addressing these current risks, the FSA says it will play a full role in modernising the global regulatory framework. This will involve taking forward the agenda that will be laid out in an FSA Discussion Paper in March.

The FSA will also complete the planned programme of improvements to its supervisory processes.

Hector Sants, chief executive of the FSA, says: “The financial services industry is facing unprecedented challenges, which look set to continue in 2009. The FSA has a central part to play in addressing these challenges and providing leadership on the future shape of regulation.

“We will be focused on ensuring firms are soundly run in these difficult times and consumers are protected.

“We will need additional financial resources to meet these demanding priorities for the coming year.

“This will mean higher fees for regulated firms, although we have been careful to ensure, as far as possible, that firms requiring the most regulatory work and engagement pay proportionately. There will be no increase in fees for the smallest firms, and many of them will actually experience a fee reduction.”