Feedback on Consultation Paper No. 2 2021 - Investment Business Fees

Summary

This is the JFSC's feedback paper on Consultation Paper No. 2 2021, which proposed changes to fee rates for investment business. It summarises industry responses and confirms the final changes the JFSC is implementing to the Investment Business Fees Notice, effective 1 May 2021, with the finalised notice included as Appendix B.

• Change of control fee: A new transaction fee applies where a legal entity applies to acquire, merge with, or cease being a Registered Person, calculated at the application fee rate, plus a £1,000 premium if the Registered Person is subject to heightened supervision or enforcement.
• Alteration fee: A new £400 fee applies for applications to add, amend or remove licence conditions or licence classes (not payable if a change of control fee is also due).
• Annual fee increase: Existing investment business annual fees increase by 2% (Option 2), moving to a rolling average basis for counting investment employees and removing the existing fee cap.
• Employee data submission: Firms must supply investment employee data needed to generate their invoice, due by 15 June 2021.
• Payment terms: Annual fee payment is due 30 days from the invoice date (or on the date an application is granted for new registrants); late payment incurs a 5% surcharge and late data submission incurs a £200 administration fee.
• Late filing fee: A £100 per month (or part month) fee applies for failing to file or deliver any required document by its due date, unless the JFSC has agreed in writing to a later date.

The changes were broadly supported by respondents, with five of seven preferring Option 2 for the fee increase basis. The JFSC noted it will consider suggestions such as risk-based discounts and flat per-employee fees in future fee consultations.

Key obligations

• Registered Persons acquiring, merging with, or ceasing to be a Registered Person must pay a change of control fee at the application fee rate (plus £1,000 if subject to heightened supervision or enforcement).
• Registered Persons applying for an alteration (name change, licence condition addition/amendment/removal, or licence class removal) must pay a £400 alteration fee.
• Firms must supply investment employee data needed to calculate their annual fee by 15 June 2021.
• Registered Persons must pay the annual fee within 30 days of the invoice date (or by the date an application is granted, for newly registered firms).
• Failure to pay the annual fee by the due date incurs a 5% late payment fee on the unpaid amount, reapplied monthly.
• Failure to supply required employee data by the due date incurs a £200 administration fee, reapplied on the 15th of each month until supplied.
• Failure to file or deliver any required document by its due date incurs a £100 fee per month or part month until filed, unless the JFSC agrees in writing to a later date.

Applies to

Registered Persons (investment business), Investment business licence holders (Class A, B, C, D and E)

Deadlines

• 1 May 2021: Revised investment business fees, including new change of control and alteration fees and the 2% annual fee increase, take effect.
• 15 June 2021: Deadline for firms to provide investment employee data needed to generate their annual fee invoice.
• 30 days from the invoice date: Due date for payment of the annual fee for firms already registered on 1 May 2021.
• 1 May 2021 to 30 April 2022: Period for which the fees set out in the Investment Business Fees Notice are effective.