The Association of Consumer Support Organisations (ACSO) has responded to the Financial Conduct Authority (FCA) consultation on the proposed changes to the raising of FCA fees from 2021/22.
Matthew Maxwell Scott, executive director of ACSO, said “[g]iven the importance of its regulatory work, not least in regard to the protections afforded to consumers, there is a need to ensure the FCA maintains the level of funding required to continue its operations, albeit in a fair and balanced way.
“On the proposed changes to the application fees for all FCA-regulated entities, relating to the authorisation of an organisation by the FCA, the proposed uniformity of fees and a substantial reduction in the number of pricing categories appears eminently sensible. The revalorising of the current fees and condensing the fees into just ten pricing categories will simplify the authorisation process and guidance.”
Maxwell Scott continued, “[w]e have no objections to the FCA placing claims management companies (CMCs) into Category 6, with a one-off fee of £10,000 applicable and therefore this no longer being an income-based assessment. The proposed exemption to this rule is the introduction of a Category 4 fee of £2,500 for CMC lead generators. Again, we have no objections to the proposal and have previously engaged with the FCA suggesting that a risk-based approach to regulatory and ombudsman costs is sensible.
“CMCs who operate solely as lead generators identify and seek out consumers who may have a claim and refer them to others such as solicitors. They do not provide advice, legal representation or investigate claims, meaning they represent a far-lower risk profile to consumers as they neither manage a claim nor client money.
“There is a risk of consumer detriment associated with a lead generator’s marketing activities, however, this is far lower than the risks associated with management of the claim and consumer monies. As such, lead generators incur a much lower level of regulatory and complaints costs, which should be reflected in the regulatory fees they pay to the FCA.
“The principle of setting authorisation fees for CMCs based upon risk profiles, as advanced in the proposals, is fair and impartial. For this reason, we urge the FCA to consider applying this approach to its periodic fee structures and complaint fees, which form a large proportion of FCA and [Financial Ombudsman Service] fees for regulating CMCs, rather than just the authorisation fee.”
ACSO members can read the submission in full on the members’ area of the website.