PRA fees and levies: model transaction fees, fees and FSCS levies for insurers and fees for designated investment firms - PS28/17
Overview
This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to Consultation Paper (CP) 16/17 ‘PRA fees and levies: model transaction fees, fees and FSCS levies for insurers and fees for designated investment firms’.
It sets out final rules intended to:
- introduce a new approach for determining periodic fees for designated investment firms (DIFs) in the A10 fee block;
- introduce a new approach for determining periodic fees for general insurers and life insurers in the A3 and A4 fee blocks respectively;
- introduce a new approach for determining Financial Services Compensation Scheme (FSCS) levies for insurance firms falling within FSCS levy classes B1 (general insurance) and C1 (life and pensions);
- amend an error in the rules concerning the criteria for determining model application fees under CRR;
- change the criteria for determining model application fees for DIFs and insurers; and
- introduce a model maintenance fee for firms with Solvency II or CRR models.
The final rules are included in the appendices to this PS.
This PS is relevant to insurers and DIFs, as well as firms that have, or intend to apply in the future for, Solvency II or CRR models. The proposals relating to FSCS levies are relevant to insurance firms falling within FSCS levy classes B1 (general insurance) and C1 (life and pensions), the FSCS Ltd as scheme manager, the Society of Lloyd’s and policyholders.
Feedback on consultation responses
The PRA received eleven responses to the CP. The PS provides the PRA’s feedback to responses and its final decisions.
Policy statement
Appendices
PRA rulebook: PRA fees amendment instrument 2017
Published on 8 August 2017
Background
This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals relating to periodic fees for designated investment firms (DIFs), periodic fees and Financial Services Compensation Scheme (FSCS) levies for insurers, and fees in relation to models.
This CP is relevant to insurers and DIFs, as well as firms which have, or intend to apply in the future for, Solvency II or CRR models. The proposals relating to FSCS levies are relevant to insurance firms falling within FSCS levy classes B1 (general insurance) and C1 (life insurance), the FSCS Ltd as scheme manager, the Society of Lloyd’s and policyholders. This CP is in addition to the usual, annual consultations on fees and the FSCS management expenses levies limit.
Summary of proposals
The proposals aim to ensure that the methodologies for determining PRA fees for DIFs, life insurers and general insurers are appropriate to the risks these firms pose to the PRA objectives and, in the case of PRA fees and FSCS levies for general and life insurers, reflect the introduction of Solvency II. Other changes set out in the CP are intended to ensure that model application fees are appropriately calibrated for different fee payers, and that PRA costs associated with reviewing and maintaining firms’ models and model changes are appropriately targeted at the relevant firms.
Draft rules are set out in the appendices to this CP.
Responses and next steps
The proposed implementation date for the changes to the periodic fees and the Regulatory transaction fees: model approaches (excluding the change to CRR thresholds based on minimum eligible liabilities) is 1 March 2018. The proposed implementation date for the change to CRR thresholds based on minimum eligible liabilities is 6 December 2017. The proposed implementation date for the revised tariff base for FSCS levies is 1 April 2018 for the start of the FSCS’s 2018/19 financial year. The PRA proposes to introduce the rules relating to reporting deadlines for the FSCS levy in late 2017.
This consultation closed on 24 October 2017.