An alternative “differential option” for licensee fees is being proposed by the Guernsey Financial Services Commission in its consultation paper on fees for 2014 and 2015.
One option is to increase fees across the board by 1.25 per cent per annum but the Commission’s preferred option addresses anomalies where the fees paid by some sectors of the financial services industry do not currently meet the cost of supervising them.
It is proposed that fees for the investment sector, which contribute 40 per cent of the Commission’s revenue, would remain unchanged for 2014 while other sectors, other than for anomalies, would see a fee increase of 0.3 per cent. In 2015 fees would rise across all sectors by circa 1.3 per cent, other than for anomalies.
If fee income remains at the same level as that for 2013, it is anticipated that there will be a real terms reduction in 2014. Commission salaries are budgeted to remain unchanged in 2014 and below inflation increases in fees in the short term would be supported by a continued focus on cost control.
The Commission proposes addressing the anomalies as follows: For banking, a new approach would take into account asset size and degree of risk, meaning that some firms would incur higher and some lower fees. For the fiduciary sector, two new fee bands would be introduced – for those with a fiduciary-related turnover of more than £7 million and more than £10 million. Additional increases are also proposed for a small number of insurance firms where the fees paid do not meet their supervisory costs.
The forecast for 2014 fee income is £12.25 million, exactly the same as the forecast fee income this year.
William Mason, the Director General of the Commission, said: “These consultation proposals seek to make fees fairer for firms in different sectors and also honour our commitment not to raise aggregate fee income by more than two per cent in 2014.”
Click link below to the consultation paper on fee rate proposal:
Guernsey Financial Services Commission Consultation Paper: Fee Rate Proposals, effective from 1 January 2014