A group of lessors, including One pm, Kennet Leasing, Tower Leasing and Henry Howard, have called on the industry to push for a change in how Financial Conduct Authority (FCA) fees are calculated when charging regulated firms.
Under the current regime, fees for credit agreements, such as HP, are based on the interest charged by lessors, but ‘pure’ hire agreements are calculated on the cumulative rental payments. As a result, the FCA ‘levy’ on a £20,000 hire agreement might be £20 per year compared to £5 per year for a similar credit arrangement.
In the FCA’s annual fee consultation, it asked for views on whether the current fee calculations are fair, and what improvements could be made. One option suggested was to allow firms to calculate their ‘regulated income’ – the basis of the FCA fees – based on the interest element of the agreement for both hire and credit arrangements.
The aforementioned lessors, advised by consultancy Asset Finance Policy Limited, wish to obtain the option to use the interest-based fee model on both credit and hire agreements, and have called for other asset finance firms to answer to an FCA consultation before it closes on 15 January.
Jason Davies, general manager at One pm Finance, said: “Many in the industry believe the current FCA fees rules are unfair for businesses and individuals that want to hire rather than buy vehicles or equipment.
“This is our opportunity to secure an improvement that will help avoid the leasing industry paying more than its fair share of the regulator’s costs, but it will only happen if firms respond to the consultation in early January.”