The Financial Sector Conduct Authority (FSCA) published FSCA General Notice 1258 of 2022 (the Notice) on the Levies for Financial Institutions. The Notice has been through the consultation phase in July 2022 where the FSCA proposed a 5% increase from last year, with interested parties having submitted their comments. Masthead considered the impact of the proposed increases in levies on independent financial advisors and submitted comments to the FSCA.
Although most of the input from industry, including that of Masthead, requested a reconsideration of the increase taking into account the challenging economic and business environment, the FSCA has not reduced the proposed levy increase. The final 2022 levies therefore equate to approximately a 5% increase from last year’s 2021 levies.
There were some instances where a 0% increase was applied, e.g. the amount per Key Individual/Representative for Authorised financial services providers (FSPs) authorised only for Long-term Insurance subcategory A and/or Friendly Society Benefits, which has not increased at all from 2020. The calculation factor or rate applied to the Assets Under Management for Category II, IIA and III FSPs also remained unchanged from the previous year.
The FSCA has subsequently published its response to the comments received. In response to the request to reduce levy increases, the FSCA commented “The Authority has considered and factored the local and global challenging economic environment when determining the percentage increase for the 2022 levies. The impact of Covid19, the Russia-Ukraine war, unprecedented price increases and inflation have been considered and factored in the proposed levy increase. The FSCA has over the past years contained levy increases to below the CPI to cushion the industry against the difficult trading economic conditions. Against this background, the FSCA proposed 5% levies increase for 2022 compared to the prevailing CPI at 7.4%. The Authority continues to grant pay arrangements to regulated entities, reductions of levies and exemptions on a case-by-case basis to address the economic hardships.”
Levies on FSPs 2022
FSPs are required to pay a levy to the FSCA to cover the cost of the FSCA’s supervision and a levy for funding the Office of the FAIS Ombud, by 31 October of each year.
The Tables below set out the FAIS levy which must be paid by the different categories of FSPs (section 15 of the Notice), and the FAIS Ombud levy which is due by all FSPs (section 16 of the Notice).
Multiple licence holders
Where there are multiple FSPs that form part of the same legal entity, they are jointly and severally liable for the payment of a single levy. The key individuals and representatives, for purposes of the levy payment, are deemed to be the key individuals and representatives of one FSP.
Lifted Suspension
Where an FSPs licence has been suspended on 31 August 2022, but the suspension is lifted after that date then the FSP is still required to pay the levy within 30 days from the suspension being lifted. The levy must be calculated based on the statistics of the FSP, on the date of the suspension being lifted.
Deadline
The FSCA levy invoices will be mailed towards the end of September 2022 and will be payable by 31 October 2022. FSPs are reminded to check that the FSCA has their correct contact details, to ensure that the Invoice reaches the FSP and can be paid before the deadline date. If an FSP does not receive their invoice ahead of the deadline date, we suggest that they contact the FSCA to request that this be re-sent to them. Should the levy not be paid, the licence of the FSP may be withdrawn in terms of section 9 of the FAIS Act.
[1] The total number of key individuals of the FSP approved in terms of FAIS plus the total number of representatives appointed by the FSP, less the key individuals that are also appointed as representatives as at 31 August 2022.
[2] The total value of investments managed on behalf of clients in terms of the authorisation as an FSP on 30 June 2022. The investments under management held in foreign currency must be included at the exchange rate published in the Press at that date.