FSA Annual Report 2006/07 - Better Regulation Ltd

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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