FSPs will pay 5% more in levies in the 2022/23 levy year than they did in 2021/22, as the FSCA has rejected calls from some stakeholders to implement a lower increase.
Our columnist, Paul Kruger, addresses the Authority’s responses to these calls here: The past four years have not been kind to independent financial advisers.
The FSCA not only declined to implement a lower increase for FSPs; it also stood firm on the introduction of a R100 000 annual levy on over-the-counter (OTC) derivative providers (see below).
Last year, the FSCA proposed a 4% levy increase, but this was reduced to 3% following comments from stakeholders that the proposed increase was too high, particularly because of the impact of Covid-19 on financial institutions.
This year will probably be the last in which the FSCA raises levies in terms of section 15A(1) of the Financial Services Board Act. The Financial Sector and Deposit Insurance Levies Bill, which is making its way through Parliament, should be on the statute books in 2023. Until then, the formulae in the schedules to the Levies Bill do not apply.
In an earlier article, published when the proposed levies were announced, I compared the levies with what FSPs would have paid if the Levies Bill was in force.
Read: FSCA proposes to increase FSPs’ levies by 5%
The table below sets out the 2022/23 levies for advisory and intermediary FSPs.
Non-bank ODPs call for lower levy
Some OTC derivative providers – particularly non-bank ODPs – were not happy with the introduction of a R100 000 annual levy. They wanted the levy to take into account that the market comprised entities of different sizes, with different trading volumes.
There were proposals for a distinction to be made between bank and non-bank ODPs, with the latter paying a lower basic levy, plus a component based on the value of derivatives originated, issued, sold and/or for which a market has been made, up to a maximum (possibly R100 000).
In response, the FSCA said the levy of R100 000 was aligned with the base amount in the Levies Bill, which does not distinguish between a bank ODP and a non-bank ODP.
The Authority said it would be pointless to impose a lower amount this year, only for ODPs to have to pay R100 000 once the bill became law.
A summary of the levy increases for other financial institutions are in this table:
Click here to download “General Notice 1258 of 2022 – Levies on financial institutions”, which was published in the Government Gazette on 29 August.
