1. Statutory supervision functions under the Insurance Companies Act 1982 are contracted out by the Treasury to the Financial Services Authority. The fees raised under these regulations are the charge to supervised companies to recover most of the costs incurred by the Treasury and the FSA in carrying out these functions.
2. The reason for raising the fees from industry is that the costs of supervision should be borne by those companies requiring supervision, rather than by taxpayers generally.
3. The purpose of regulation is to maintain an effective and efficient financial services industry. This promotes the UK insurance industry as a competitive, dynamic and innovative market-place, while providing an effective balance between regulation and consumer protection. In this way, a well-regulated financial services sector is beneficial to firms that are regulated.
4. These Regulations prescribe the basis and the amounts of the fees levied. The fee structure is designed so that companies do not face complicated administrative exercises to determine how much they should pay, and the tariff is set in a way that is equitable, taking into account the companies ability to pay.
5. Insurance companies carrying on business in the United Kingdom, except:
6. These regulations do not impose any additional administrative burden on insurance companies. They simply increase the amount to be paid. Overall, the amount recoverable in 2001 will rise by £1.1 million to £14.6 million.
7. The amount of the fees is mainly determined by the costs incurred by the FSA in carrying out its contractual responsibilities. An under-recovery of fee income in 1999-2000 has meant that an additional amount has been included in this year's fees to recover the shortfall.
8. The Association of British Insurers, the industry's main trade association, representing over 96% of insurers in the UK, and Lloyd's have been consulted. They are content with the level of increase this year.
Title of Regulations
The Insurance (Fees) Regulations 2001 (SI 2001 No 812)
Declaration:
I have read the Regulatory Impact Assessment accompanying these regulations and I am satisfied that the balance between costs and benefits has been appropriately struck.
Signed by the responsible Minister:
Melanie Johnson MP
Economic Secretary to the Treasury
Department: HM Treasury
Regulatory Impact Assessments index