As we reported last week, National Treasury has revised some of the levies that FSPs will have to pay to the FSCA in terms of the Financial Sector and Deposit Insurance Levies Bill.
During the meeting of Parliament’s Standing Committee on Finance, when Treasury announced the revised levies, MPs were shown an example of how the new formulae will affect the levies payable by a sole proprietor Category I or IV FSP.
The calculation did not make sense to me, and I raised the matter with the FSCA. After some correspondence, the FSCA said the special levies had been calculated incorrectly.
The Authority provided the following corrected examples that compare the levies payable in terms of the Bill that came before the committee with the levies payable following Treasury’s amendments to Table B in Schedule 2.
Notice that the special levy, which will apply for two years from the date of commencement, applies to each entity to which an FSP pays a normal levy.
As was announced last week, the base FSCA levy for Categories I and IV (as well as Category IV long-term insurance sub-category A or friendly society benefits) has been reduced from R4 000 to R3 600. The Category II, IIA and III base levy decreases by 6.25%, from R8 000 to R7 500.
The levy per representative/key individual decreases by 16.1%, from R620 to R520 for Categories I, II, IIA, III and IV. In the case of Category IV long-term insurance sub-category A or friendly society benefits, the rep/KI levy decreases by 10.7%, from R280 to R250.
However, the levy payable to the FAIS Ombud per representative or KI has not been reduced. It remains at R690, which is a 54% increase compared to the current levy of R447. Treasury also did not lower the FAIS Ombud base levy. It remains at R1 100, although this is 6% lower than the current levy of R1 172.
The table below shows the impact of having more representatives. An FSP with 10 reps will pay 10% more levies, while it is 22.37% with 20 reps. The increase then levels out at about 26% for FSPs with hundreds of reps. Note than an FSP with 20 reps ends up paying more in levies to the FAIS Ombud than it does to the FSCA, which is its primary regulator.