The Financial Conduct Authority has confirmed that it will increase annual fees for Financial Planning firms by 5.6% from July.

For block A.13, which includes most Financial Planning firms, total fees collected will rise to £86.8m for 2022/23.

This is higher than the £82.3m proposed by the regulator in its previous consultation.

A total of 11,651 firms fall under block A.13, a reduction of 2.1% year-on-year.

Appointed representative fees will be held steady at £3,266.

Minimum and flat rate fees are to increase after two years of being frozen during the pandemic.

Minimum fees for advisory firms will rise to £1,500 for 2022/23 from £1,151, increasing to £1,750 in 2023/34. There will be further rises to £2,000 for 2024/25, and to £2,200 in 2025/26.

The regulator had previously said it would increase minimum fees to £1,750 next year.

The FCA said it has received a "significant amount" of feedback that it should not increase fees for small firms, including requests for a commitment to freeze minimum fees for a period once they had been set at £2,200.

It also received calls to consider the continuation of extended payment terms where there are reasonable grounds given the current economic climate.

The regulator said it would not consider extended payment terms due to the additional administration costs. It said that if a firm faces "genuine difficulty over the time of its invoice" it should engage with the regulator’s fees team.

The FCA needs to raise a total of £630.9m for 2022/23, an increase of 2.8% year on year, but lower than suggested in previous consultations.

In previous consultations the regulator said it needed to raise £640m for its total annual funding requirement (AFR) for 2022/23, an increase of 4.3% (£26.3m) from this year.

Of the £630.9m AFR for 2022/23, £581.5m will be raised through fees payable by financial firms. This is a 3.3% increase from 2021/22.

One of the reasons for the AFR reduction since earlier consultations was due to feedback from smaller firms. As a result, the regulator is now phasing the increase in minimum fees over 4 years instead of 3.

It was also able to reduce the AFR due to an increase in revenues from financial penalties which have been able to cover the regulator’s 2021/22 enforcement costs.

Financial Planning firms can use the FCA’s online fees calculator to calculate their individual fees based on the final rates published this morning. The calculator includes FCA periodic fees, Financial Services Compensation Scheme levies and Financial Ombudsman Service fees. 

The FCA will invoice fee payers from next month for their 2022/23 periodic fees and levies.