Financial Conduct Authority (FCA) chief executive Nikhil Rathi has defended a proposed £1,049 annual rise in regulatory fees as funding for the supervision of small firms following the London Capital & Finance (LCF) scandal.
Speaking to the Treasury committee, Rathi (pictured) said that the watchdog has proposed a hike in fees from £1,151 to £2,200 for all regulated firms to help fund the supervision it needs to be undertaking and the investment it requires for data and infrastructure to oversee small companies.
Regulatory fees were frozen during the pandemic but now the figures for the proposed hike are up for consultation until 31 January 2022.
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“It’s an important topic, we signalled in our fees consultation last year a desire to move towards a more consistent fee structure including for smaller firms,” Rathi said.
“The investments we’re putting into the supervisions into small firms, investing in the register and authorisation gateway and for more holistic data-led supervision. Realistically that needs to be funded and its reasonable for that to be funded by the population we’re looking after.
“In the case of LCF a fee that would have around £1,000 a year won’t do justice to the kind of supervision we need to be undertaking and the kind of investment we need for our data and infrastructure for those types of firms in the future.
“It’s a consultation but it’s that rebalancing we’re hoping [for]. We’re open to feedback.
“The underlying point is we need to invest very heavily in the supervision into these small firms where there is the potential for very significant harm. The healthy firms want us to go after firms committing misconduct because it cleans up market for them.”