Welcome to the UKGI weekly regulation update service for Aviva ABC brokers

Context

The FCA has published its first Consultation in the 2025/26 fees and levies round of Consultations, proposing changes to the way the FCA will raise fees from 2025/26, and the way it will collect levies payable to FOS.  There is little of relevance to the insurance and credit sectors, but there are two proposed changes that will be relevant to many firms (FOS fees reporting and AR / IAR fees).

Key points to note and next actions

• In relation to the FOS levy, the FCA is confirming the earlier decision to widen the definition of ‘relevant business’ for RMA-J FOS fees reporting purposes so that it includes all types of business that are eligible to take a complaint to FOS (i.e, all the different types of eligible complainant).  The main item of interest is that the new RMA-J FOS fees reporting is being put back to 1 April 2026 from 1 April 2025.  The new Consultation gives us some time to try to unpick exactly how the FCA plans to make sure that the actual amount being paid by firms is not impacted too heavily by the addition of the wider reporting.  FOS will need the same amount of money, so the FCA will seek to address this by adjusting (presumably downwards) the actual percentage of reported income which is to be paid as a fee.
• In relation to ARs, the FCA is proposing (in simple terms) to replace the ‘fixed fee per AR and per IAR’ with a ‘variable fee per AR and per IAR’.  The fee model and structure will remain the same (so a fee per AR / IAR) and the relative size of the IAR fee compared to the AR fee will remain the same (the IAR fee is 30% of the AR fee and will stay that way).  The £289 per annum per AR, and £87 per annum per IAR), will be replaced by fees calculated to recover the costs that the FCA has actually incurred.  The FCA has said that if the variable-rate model had been in place this year, the fees paid by individual Principal firms would have been the same or close to the fees they actually paid.