FCA sets its first budget at £432m: Advisers to pay 30%

The Financial Conduct Authority has set its annual budget for 2013/14 at £432.1m, a 25 per cent reduction from £578.4m in 2012/13.

Martin Wheatley 480
FCA chief executive designate Martin Wheatley

The FCA’s business plan, published today, shows the budget has been pushed down by an FSA underspend in 2012/13 of £19.5m. Of this, £15m had been allocated to fund emergency regulatory projects but was not needed.

Out of the total £432.1m budget, the industry will pay £391.5m, following £40.6m in retained FSA fines to reduce the amount paid by the industry in fees.The plan suggests that around 30 per cent of the Budget will be paid for by intermediaries.

Last year chancellor George Osborne ordered all FSA fines to be directed to the public purse rather than industry fees.

The budget is made up of £445.7m to fund the FCA’s operating costs, £2.6m for regulatory reform, and £3.3m in costs associated with changes to the regulator’s remit.

A further £12.6m estimated cost of taking on responsibilities for supervising consumer credit has been ringfenced from next year’s budget. These costs will be recovered from consumer credit firms once the FCA sets up its consumer credit regime.

Around 30 per cent of the FCA cost burden will fall on investment advisers, mortgage advisers and general insurance intermediaries.

A further 28.5 per cent will fall on banks, building societies and lenders, 13.6 per cent will fall on insurers, and 12.5 per cent on fund managers and scheme operators. Firms that do not fall into these categories will bear 15.1 per cent of the costs.

The FCA will employ a total of 2,848 full-time equivalent staff in 2013/14 at a cost of £261.3m. It plans to spend £19.8m on enforcement costs and £18m in professional fees, including the cost of specialist advice, external support, and its customer contact centre.