Prudential Regulation Authority Rulebook

3.1

Periodic fees are payable in respect of each PRA fee year by any person who is, or becomes, a firm during the fee year.

3.2

The amount payable depends upon the fee block to which the firm has been allocated. Firms falling into more than one fee block pay periodic fees in relation to each, other than firms falling within the A6 Society of Lloyd’s fee block and any other fee block, which pay periodic fees in relation to the A6 fee block only.

3.3

Periodic fees payable by firms in any fee year will be the sum of the following (so far as applicable to them):

1. (1) a minimum periodic fee at the rate specified in Table IA of the Periodic Fees Schedule;
2. (2) [deleted];
3. (3) periodic fees at the rate specified in Table IIIA, subject to any modifications in Table IV and Table V, of the Periodic Fees Schedule calculated as follows:
1. (a) applying the tariff bases and valuation points set out in 3.4 to the tariff data which they have supplied to the PRA or its collection agent;
2. (b) where applicable, grouping tariff data into the tariff bands shown in Column 3 of Table IIIA of the Periodic Fees Schedule; and
3. (c) applying the appropriate tariff rate as shown in Column 4 of Table IIIA of the Periodic Fees Schedule;
4. the fee being the total of sums payable in respect of all tariff bands;
5. (4) an EU withdrawal costs allocation calculated in accordance with Table VI, subject to any modifications in Table IV and Table V, of the Periodic Fees Schedule;
6. (5) the ring-fencing fee; and
7. (6) [deleted.]
8. (7) a model maintenance fee calculated in accordance with Table VIII of the Periodic Fees Schedule.

3.4

The tariff bases and valuation points referred to in 3.3 (3)(a) are:

1. (1) for firms in the deposit acceptors fee block (A1):
1. (a) if the firm is a bank and reports monthly, average MELs for October, November and December prior to commencement of the fee year; or
2. (b) if the firm is a bank and reports quarterly, MELs for the December prior to commencement of the fee year; or
3. (c) if the firm is a building society, average MELs for October, November and December prior to commencement of the fee year; or
4. (d) if the firm is a credit union, either its MELs for the December preceding the commencement of the fee year or, in the absence of December MELs its MELs as disclosed by its most recent annual return submitted for regulatory reporting purposes prior to the December preceding commencement of the fee year.
2. (2) for firms in the general insurance fee block (A3) the firm’s gross written premium for fees purposes and its best estimate liabilities for fees purposes for the firm’s financial year which ends in the calendar year to 31 December prior to commencement of the fee year, unless the firm is a UK ISPV, in which case the tariff base is not relevant and a flat fee shown in Table IIIA of the Periodic Fees Schedule is payable, noting that:
1. (a) this tariff base (A3) does not include gross written premium for fees purposes and best estimate liabilities for fees purposes on which a composite firm reports data relevant for the life insurance fee block (A4).
2. (b) where any figure used in the calculation of this tariff base (A3) is a negative number, it shall instead be deemed to be zero.
3. (c) in the calculation of the periodic fee due under 3.3(3) for this fee block (A3), the following weightings shall apply:
   1. (i) 90% of the periodic fee shall be determined from gross written premium for fees purposes; and
   2. (ii) 10% of the periodic fee shall be determined from best estimate liabilities for fees purposes.
3. (3) for firms in the life insurance fee block (A4):
1. (a) for UK Solvency II firms, including composite firms which are also UK Solvency II firms to the extent that they are required to report data used for this tariff base (A4), the firm’s gross written premium for fees purposes and its best estimate liabilities for fees purposes, for the firm’s financial year which ends in the calendar year to 31 December prior to commencement of the fee year;
2. (b) for non-directive firms, including non-directive firms which are also composite firms to the extent that they come within the life insurance fee block, the tariff base is not relevant to the level of fees due and only the minimum fee as specified in Table IA of the Periodic Fees Schedule is payable.
3. (c) Where any figure used in the calculation of this tariff base (A4) is a negative number, it shall instead be deemed to be zero.
4. (d) in the calculation of the periodic fee due under 3.3(3) for this fee block (A4), the following weightings shall apply:
5. 1. (i) 60% of the periodic fee shall be determined from gross written premium for fees purposes; and
   2. (ii) 40% of the periodic fee shall be determined from best estimate liabilities for fees purposes.
4. (4) for firms in the Lloyd’s managing agents fee block (A5), active capacity as reported to the Society for the underwriting year which is in progress at the beginning of the fee year.
5. (5) for firms in the designated firms dealing as principal fee block (A10), total assets for fees purposes as at 31 December preceding commencement of the fee year and the firm’s total operating income for fees purposes for the four quarters ending on or before 31 December preceding commencement of the fee year. In the calculation of the periodic fee due under 3.3(3) for this fee block (A10), the following weightings shall apply:
   1. (a) 50% of the periodic fee shall be determined from total assets for fees purposes; and
   2. (b) 50% of the periodic fee shall be determined from total operating income for fees purposes.
6. (6) For all firms, if the data source specified in the applicable tariff base is not available to the PRA for any reason and the same data is available to the PRA from an alternative source, periodic fees applicable to any firm under 3.3(3) will be calculated using that alternative source.
7. (7) For firms in the designated firms dealing as principal fee block (A10), if, despite a firm having complied with its reporting obligations, fewer than four quarters of data for total operating income for fees purposes have been reported to the PRA, the arithmetic mean of the reported data shall be calculated, and multiplied by 4.

3.5

The periodic fees payable by:

1. (1) the Society are as specified in Table IIIA of the Periodic Fees Schedule.
2. (2) [deleted]
3. (3) [deleted]

3.6

The changes to this rule are effective from 23:00 on 31/12/2020.

The following requirements apply to all firms whose activities give rise to periodic fees, other than firms which pay only a flat rate of fee:

1. (1) [deleted]
2. (2) if the PRA does not, on its own behalf or through its collection agent, obtain sufficient, or sufficiently detailed, information, the PRA may obtain this through its general information-gathering powers;
3. (3) [deleted]
4. (3A) for third country branches, former freedom of service providers and Gibraltar-based firms, the information required for the tariff base is in relation to PRA regulated activities of the firm carried on from offices in the United Kingdom.
5. (4) as periodic fees in respect of any fee year are calculated on the basis of firms’ tariff data for the previous fee year, there may be insufficient tariff data on which the periodic fees may be calculated under 3.4 where a firm becomes authorised for the first time or undertakes a new PRA-regulated activity, resulting in a significant change to its business. In those circumstances, the periodic fees payable will be calculated in accordance with:
1. (a) 3.7 for firms in their first fee year;
2. (b) 3.9 and 3.10 for firms in the deposit acceptors fee block (A1), the general insurance fee block (A3) or the life insurance fee block (A4) in their second fee year or any subsequent fee year;
6. (5) a firm intending to apply any of the methods of calculation in 3.9 must notify the PRA’s collection agent by the date specified in 3.6 (1).
7. (6) Unless 3.7 or 3.9 applies, where a firm has not provided sufficient tariff data for any period by reference to which periodic fees are to be calculated, but a valuation is available for the previous period by reference to which periodic fees are to be calculated, the fee should be calculated using the tariff data applicable to the previous period multiplied by 1.10. An administration fee of £125.00 is payable in this case in addition to the minimum fee.

3.7

A firm in its first fee year pays periodic fees based on its projected valuation for the first twelve months of its new business as follows:

1. (1) The calculation requires the firm to identify, in Table III of the Periodic Fees Schedule, the tariff rates which will be relevant to it as a result of its new or extended permission and apply the formula in 3.7 (2). The resulting figure will be the periodic fee payable by the firm for its first fee year.
2. (2) The formula referred to at 3.7(1) is (A+B) x C, where:
1. A = the amount arrived at by applying the tariff rates in Table III of the Periodic Fees Schedule to the firm’s projected valuation for its first year of new business, as provided to the PRA or its collection agent during the application and data collection process;
2. B = the A.0 minimum fee, unless already paid; and
3. C = the number of calendar months (inclusive) between the calendar month during which the firm received its new or extended permission and the last calendar month of the fee year ÷ 12.

3.8

3.9 applies only to firms in the deposit acceptors fee block (A1), the general insurance fee block (A3) or the life insurance fee block (A4).

3.9

Subject to 3.10, where in:

1. (1) its second fee year; or
2. (2) any subsequent fee year,

a firm has not submitted tariff data to enable the periodic fees calculation to be made in respect of that fee year, periodic fees will be calculated in accordance with Table A below:

3.10

Except in the circumstances to which 3.9 applies, firms in their second fee year or any subsequent fee year after receiving a new or extended permission must calculate their new or additional liability for periodic fees in accordance with 3.4.

3.11

The changes to this rule are effective from 23:00 on 31/12/2020.

The following modifications to periodic fees will apply:

1. (1) In relation to former incoming EEA firms and former incoming Treaty firms:
1. (a) [deleted.]
2. (b) the tariff rates set out in Table IIIA of the Periodic Fees Schedule only apply to the regulated activities of the firm in the United Kingdom and the tariffs are modified in accordance with Table IV of the Periodic Fees Schedule; and
3. (c) the EU withdrawal costs allocation in Table VI is modified in accordance with Table IV of the Periodic Fees Schedule.
4. (d) firms having the status of former incoming EEA firms and former incoming Treaty firms immediately after IP completion day shall retain this status for the purposes of this rule (3.11(1)) throughout the 2020-21 fee year.
2. (1A) In relation to Gibraltar-based firms, the modifications in 3.7 apply only in relation to the relevant regulated activities of the firm carried on from offices in the United Kingdom.
3. (2) Periodic fees in the A3 general insurance fee block and the A4 life insurance fee block payable by firms outside the scope of the Solvency II Directive are subject to the modifications in Table V of the Periodic Fees Schedule, to be applied to the final figure arrived at under 3.3(3) once all other modifications relevant to this part of the firm’s periodic fees have been taken into account.
4. (3) The EU withdrawal costs allocation in Table VI payable by non-directive firms in the A1 deposit acceptors fee block, A3 general insurance fee block and A4 life insurance fee block is subject to the modifications in Table V of the Periodic Fees Schedule.

3.12

Where:

1. (1) a firm (A) acquires all or part of the business of another firm (B) in relation to which a periodic fee would have been payable by B; or
2. (2) A becomes authorised as a result of B’s simple change of legal status as defined in 4.5 (4), the following rules apply:
1. (a) if before the date of the acquisition, B had already paid the periodic fees in relation to the business or part of the business acquired by A, A will not pay a further fee; and
2. (b) if the acquisition occurs after the valuation point applicable to the business or part of the business acquired as set out in 3.4, A will pay periodic fees in relation to the period following the acquisition as if the acquisition had occurred immediately before the relevant valuation point.
3. (3) Where the acquisition involves a calculation of periodic fees for the A4 life insurers fee block:
1. (a) [deleted];
2. (b) If any business is transferred to A from B under the procedure set out in Part VII of FSMA and that business would have been included in B’s tariff base in the absence of the transfer, that business should be included in A or B’s tariff base depending on the date of transfer as required by 3.12(2)(b).
3. (c) Best estimate liabilities for fees purposes should include all new business transferred from B.

3.13

If a firm makes an application to cancel or reduce the scope of its Part 4A permission before the start of a fee year, the obligation to pay periodic fees under 3.1 will apply as if the relevant variation or reduction in scope had also taken effect immediately before the start of the fee year.

3.14

If, after the start of the fee year, a firm applies to cancel its Part 4A permission or if a new business activity or event which has given rise to a fee no longer applies to the firm, the firm is still liable to pay and will not be refunded periodic and other fees for that fee year, other than in cases where the PRA exercises its discretion under section 138A FSMA, in accordance with 2.9.

3.15

The due date for payment of periodic fees is as follows:

1. (1) Subject to 3.15 (3), any firm whose total liability for periodic fees in the previous fee year was less than £50,000 must pay the total periodic fee due for the current fee year in full by 1 August.
2. (2) Any firm whose combined total liability for periodic fees payable to the FCA and the PRA in the previous fee year was £50,000.00 or above must pay its periodic fees for the current year in two tranches as follows:
1. (a) an amount equal to 50% of the PRA periodic fee payable in the previous fee year on or before 1 April in the current fee year; and
2. (b) the balance of the periodic fee for the current fee year by 1 September.
3. (3) If a firm cancels its Part 4A permission in the way set out in Permissions and Waivers or the PRA has exercised its own-initiative powers to cancel a firm’s Part 4A permission, the total amount of periodic fees for the fee year, less any amounts already paid, become payable immediately before the cancellation takes effect.

3.16

A fee payer need not pay a periodic fee on the due date for payment under the relevant provision of 3 if that date falls during a period during which circumstances described in General Provisions 2.2 exist and the firm has reasonable grounds to believe that those circumstances impair its ability to pay the fee, in which case the firm must pay on or before the fifth business day after the end of that period.

3.17

Fee-payers must comply with directions from the PRA or its collection agent as to payment of periodic fees arising from any variance between budgeted and actual AFR or any corrections to the AFR once final, audited figures are available in relation to any fee year. As the PRA may determine:

1. (1) a surplus of fee income against AFR may result in a credit to firms or fee blocks; and
2. (2) a shortfall may necessitate a call for additional fees.

3.18

[Deleted.]

3.18A

1. (1) [Deleted.]
2. (2) [Deleted.]
3. (3) [Deleted.]

3.19

[Deleted.]

3.20

[Deleted.]

3.21

[Deleted.]

3.22

3.22 to 3.23 apply to CRR firms and UK Solvency II firms.

3.23

In the fee year commencing on 1 March 2018 and subsequent fee years:

1. (1) The PRA will charge a model maintenance fee to recover in whole or part the annual cost to the PRA, as determined by the PRA, of monitoring, reviewing and policy development for firms’ models for which permission has been granted under the CRR or the Solvency II directive.
2. (2) For firms with one or more models for which permission was granted before 1 March 2018, the model maintenance fee is payable for the fee year commencing on 1 March 2018 and in fee years thereafter.
3. (3) Where a first or additional model permission is granted to a firm on or after 1 March 2018 and during the first six months of any fee year, the model maintenance fee for that model is payable as from the commencement of the first subsequent fee year and in fee years thereafter.
4. (4) Where a first or additional model permission is granted to a firm on or after 1 March 2018 and during in the second six months of any fee year, the model maintenance fee for that model is payable as from the commencement of the second subsequent fee year and in fee years thereafter.
5. (5) The model maintenance fee is calculated in accordance with Table VIII of the Periodic Fees Schedule.
6. (6) For a CRR firm or group, the model maintenance fee shall be the sum of all fees applicable to that firm or group for each permitted model type.
7. (7) For composite firms which are also UK Solvency II firms, the model maintenance fee shall be determined by the fee block for which the firm or group pays the largest periodic fee under 3.3(3).
8. (8) For models incorporating more than one UK firm, the model maintenance fee shall be determined by reference to aggregated figures for all UK firms included within the scope of that model, and shall usually be payable by the firm which pays the largest periodic fee under 3.3(3) or otherwise by such firms and in such proportions as the PRA directs. To facilitate the aggregation calculation where a model incorporates one or more CRD credit institutions and one or more designated investment firms within its scope, for each designated investment firm which is also a UK firm, total assets for fees purposes shall be rounded to the nearest £1million, and each £1million of total assets for fees purposes shall be deemed equivalent to £0.4million in modified eligible liabilities. Total modified eligible liabilities shall then be added together for all UK firms within scope of the model.
9. (9) The Society shall not be required to pay a model maintenance fee.