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Britain’s main financial watchdog plans to cut the fees paid by the companies it oversees for the first time in more than a decade, reflecting the record amount of money it will retain from fines imposed in the past financial year.
The Financial Conduct Authority, which is funded almost entirely by fees paid by the firms it regulates, said on Tuesday that its annual funding requirement would increase by 3.8 per cent to £783.5mn in the financial year to April 2026.
However, the regulator also forecast it would double the amount of money it retains from financial penalties imposed on companies and individuals in 2024-25 to a record £70.5mn, rather than paying it to the Treasury.
The retained funds, which allow the FCA to recoup some of the enforcement costs incurred in the year in which the fines were collected, are used to provide a rebate on fees paid by regulated firms.
After deducting the £70.5mn rebate expected from retained fines, the total fees due to be collected by the regulator are set to fall by about 1 per cent to £713mn — the first decline since shortly after it was created in 2013.
The rebates on fees are shared with regulated companies except for those that paid fines in the year to April.
Despite this year’s expected decline, the total annual fees collected by the FCA have risen almost two-thirds since 2014, when the body was carved out of the disbanded Financial Services Authority.
As part of a new five-year strategy announced by the FCA last month, the regulator aims to keep its headcount stable, after adding nearly 1,000 extra staff to take its workforce to almost 5,000 people in the year to April 2024.
The FCA said in its annual work programme on Tuesday that it planned to make greater use of digital technology, such as artificial intelligence, to speed up applications and data submissions by the companies it regulates, as well as to spot wrongdoing.
The regulator is spending £6.9mn on its review of whether customers were mis-sold car finance because of commissions paid by banks to dealerships that increased in line with the interest rate they were charged.
It is also spending £7.8mn on developing a regulatory framework for crypto assets and £9mn on repealing regulations inherited from the EU and replacing them with rules tailored for UK needs.
