FSA Annual Report 2006/07 - Better Regulation Ltd

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Section five – Statement of allocation of costs FSA Annual Report 2006/07 95 Statement of allocation of costs for the year ended 31 March 2007 Introduction The FSA sets fees by reference to blocks of fee payers conducting similar activities, which so far as possible, reflect the FSA’s costs applicable to the respective fee blocks. The statement of allocation of costs on page 98 shows the allocation of costs for the year ended 31 March 2007, analysed by those fee blocks. Costs are allocated according to the method set out in note 1 on page 96. The report of the auditors is set out on page 99.
96 Section five – Statement of allocation of costs FSA Annual Report 2006/07 Notes to the statement of allocation of costs for the year ended 31 March 2007 1 Method of allocation The Financial Services and Markets Act 2000 provides that the FSA may make rules providing for the payment of fees to meet its expenses in carrying out its function, or for any incidental purposes and to maintain adequate reserves. Under the current fee-raising arrangements, the FSA’s fees are set by reference to costs applicable to categories of firms or bodies or individual bodies (fee-payers). These categories are known as fee blocks. The allocation of costs to fee blocks is primarily made by reference to costs applicable to each fee payer. Where costs cannot be directly attributed to individual fee payers they have been allocated to fee blocks on a basis considered appropriate by the Directors, such as on the headcount of departments, or the estimated time or resources spent on the supply of services for each fee payer within departments. 2 Allocation of net liabilities, excluding pensions liabilities We apply IAS 19 in accounting for the costs of our defined benefit pension scheme. Given the long term nature of our final salary pension liabilities, and the fact that we cannot predict with certainty how our resources will be allocated over this time scale, we do not allocate those pensions liabilities to fee blocks. 3 Reconciliation from the income statement to net costs for the year as shown on the cost allocation statement Year ended 31 March 2007 £m Net costs for the year 265.2 Add: difference between accounting changes for provisions in the statutory accounts and the related cash costs of pension contributions paid 5.6 Less: costs of implementing principles-based regulation (1.5) Net costs for the year on statement of allocation of costs 269.3
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FSA Annual Report 2006/07 - Better Regulation Ltd

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