Roger Brown is chief commercial officer, specialist lending at Premium Credit

As a regulator, independent of government, the FCA continues to recover its yearly running costs through annual fees charged to authorised firms.

FCA invoicing season is already underway but what payment options are available to regulated companies and what’s changed from previous years?

The background

As we all know 2020 has been one of the most challenging years in a generation, from a human as well as an economic perspective. Business leaders have had to navigate a series of challenges and setbacks created by COVID-19 and Brexit like never before.

During these unprecedented times of business and domestic interruption regulated companies in the financial services sector have been carefully considering ways to preserve cash flow and maintain operational resilience.

With the FCA invoicing now in full swing finance teams throughout the UK are preparing for a significant outlay to meet these mandatory fees. Like many professional fees, those billed by the FCA are rising substantially in some sectors.

Payment of FCA fees

With over 50,000 regulated firms due to pay FCA fees before the end of the year, typically ranging from a few hundred pounds to several million, some companies will be daunted by the thought of meeting this financial obligation let alone in a single lump sum.

This said, it’s not all doom and gloom. Help is at hand through Government support for those who are eligible. Finance options, provided by a specialist lender, are also a consideration for firms wishing to smooth this lump sum payment over more manageable monthly payments, giving greater control over cash-flow and making their cash reserves work more effectively for their current business needs.

Government assistance

As in other areas of the economy the British government is providing progressive support packages to assist those most vulnerable to economic hardship created by the pandemic – assistance in paying FCA fees is available to some but it has its limitations.

In short, here’s how it works for those who are eligible. For the forthcoming 2020 invoice run, instead of the normal 30-day payment terms the FCA has indicated that all firms invoiced up to £10,000 will have an extended period by which to make payment, now giving 90 days.

This measure is designed to help cash flow for smaller regulated businesses during COVID-19, however it still means that at some point the invoices will need to be paid in full. And what payment options do larger regulated companies have who aren’t eligible for this extension?

Further payment options

Partnering with a specialist lender like Premium Credit is a consideration for businesses looking for wider payment options. Not all FCA regulated firms are aware of the payment solutions that can be provided enabling FCA fees to be paid in convenient monthly amounts.

We’ve been providing this service for 14 years and it continues to increase in popularity, particularly in this era where some FCA fees are rising significantly. We’re seeing the cost of fees for some customers rise by as much as

80% compared to 2019 and as a result we’re seeing very strong demand both from existing customers and those choosing to fund their FCA fees using finance for the first time.

Our customers have a range of FCA fee costs to meet. The average loan we underwrite is over £10k, working capital that can be used elsewhere in so many different areas of their businesses. It’s a simple on-line digital application process. With years of significant investment in technology we ensure the whole customer journey is a smooth, seamless process – we as the lender undertake the bulk of the administration.

At the end of the day the FCA fees need to be met by the UK’s regulated companies and in the easiest way possible for these firms. Convenient monthly instalments facilitated by a specialist lender are becoming a widely accepted method to do this.

It’s important to act in a timely way so you have opportunity to consider the best fee payment option and avoid a financial penalty for a late response.

Whether it’s paying the FCA fees in one large hit; taking advantage of the government’s 90 day payment extension if you are a smaller business; or if you are considering fee payment in instalments by partnering with a specialist lender, act now and decide on the most effective option for your business.