The Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance, today publishes its final rates for its preparers levy and insurance and pension levies for 2009/10, further to its December 2008 consultation paper.

The rates for the preparers and pension levies are a little lower than those proposed by the FRC in December. The rate for the insurance levy remains at its 2008/09 level.

Preparers levy

The FRC’s core operating costs for its activities in relation to accounting, auditing and corporate governance for 2009/10 are £12.5m, £0.2m less than proposed in the December consultation paper. The FRC has, therefore, been able to set levy rates a little lower than those which it had proposed in December.

The average levy charged in 2009/10 to UK companies which paid the levy in 2008/09 will be 7% higher than in 2008/09 (compared to an increase of 9% proposed in the December consultation paper), though there is a wide range of increases and decreases for individual preparers.

The increases are largely attributable to the reduction in the Government contribution to the FRC’s costs in 2009/10 compared to previous years.

The levy rates are applied to publicly traded companies (the largest group contributing to the levy) on the basis of their market capitalisation, which for many companies has sharply reduced, resulting in a significant increase in the rates in order to raise the required amount.

 Following consultation in 2008, the FRC has extended the preparers levy this year to include large private entities with a turnover of more than £1bn, including the private subsidiaries of listed companies, and public sector organisations. These entities are already within the scope of, or have regard to, most of the FRC’s regulatory responsibilities but have not previously contributed to its costs.

Commenting on the preparers levy, FRC Chief Executive Paul Boyle said:

“We believe that our activities represent good value for companies operating in the UK and for public sector organisations. We are shaping and implementing UK, EU and international requirements in relation to corporate reporting and governance in ways that contribute to confidence; and we are sensitive to the risk of imposing unnecessary burdens.”

Actuarial funding arrangements

The FRC’s funding requirement in relation to actuarial standards and regulation is £2.6m, £0.1m less than proposed in the December consultation paper.

The FRC has increased the levy on pension schemes to £3.00 per 100 members for schemes with 1,000 or more members compared to £2.90 per 100 members in 2008/09. This is an increase of 3% compared to the 7% increase proposed in the consultation paper.

The FRC has maintained the insurance levy at the rate set in 2008/09: 1.7% of the FSA periodic fees for its A3 (general insurance) and A4 (life insurance) fee blocks.

Commenting on the proposals, FRC Chief Executive Paul Boyle said:

“We believe that the arrangements for funding our responsibilities for actuarial standards and regulation in 2009/10 represent good value for insurance companies, pension schemes and the actuarial profession. We will continue to consult and involve both the insurance and pension sectors in our major task of reforming technical actuarial standards in ways that will enhance the relevance and clarity of the actuarial advice they receive.”

1. The Financial Reporting Council (FRC) is the UK's independent regulator responsible for promoting confidence in corporate reporting and governance.
2. The FRC’s functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board.
3. The FRC’s Plan 2009/10 was published in April.
4. The FRC issued a consultation paper on its 2009/10 levies in December 2008.
5. The key features of the preparers levy are:
   • a minimum levy payable by all preparers
   • further amounts payable by preparers above a certain size, with the rate per £m of market capitalisation or, where appropriate, turnover declining in five levy size-bands
   • companies other than UK companies listed on the London Stock Exchange’s Main Market receive a 50% discount; and public sector organisations receive a 75% discount.
6. With the agreement of HM Treasury, BERR and the FSA, the FRC collects the UK contribution to the International Accounting Standards Board (IASB) through the business levy. This contribution will be £0.8m in 2009/10, compared to £0.7m in 2008/09.
7. The key features of the actuarial funding arrangements (unchanged from 2008/09) are:
   • a contribution equivalent to 10% of total costs from the Actuarial Profession
   • a levy equivalent to 45% of total costs from insurance companies, allocated to individual insurance companies in the same proportion as the FSA regulatory fees and collected on behalf of the FRC by the FSA at the same time that it collects its own fees. The 2009/10 levy will be an amount equivalent to 1.7% of the FSA’s regulatory fees for Fee-blocks A3 and A4 (the same rate as in 2008/09)
   • a levy equivalent to 45% of total costs from pension schemes with 1,000 or more members. The 2008/09 levy will be £3.00 per 100 members (compared with £2.90 per 100 members in 2008/09).
8. Press enquires should be directed to: David Andrews, telephone 020 7492 2382 or email d.andrews@frc.org.uk.