The FSA says proposals to charge firms' variable fees depending on their size are an "appropriate" measure to reflect the amount of work it carries out.
It says under the ‘straight line recovery' method, 90% of firms will pay less in the 2011/12 financial year despite a 10% rise in its annual funding requirement (AFR) to more than £450m. Larger firms will see significant fee increases.
The move is for those firms that pay a variable periodic fee on top of the minimum fee, which the FSA today said would be £1,000 for all regulated firms.
It proposes the variable periodic fee should increase in direct proportion to the size of a firm - on a ‘straight line' basis. The more permitted business a firm undertakes, the more fees it will pay.
Under the current policy, the FSA "moderates" the recovery of costs which, it says, can result in larger firms paying less in certain circumstances.
An FSA spokesman says: "[Straight line recovery] is an appropriate measure to reflect the activities we carry out."
Today's paper reads: "The benefit of straight-line recovery over the current moderated recovery is that it is consistent to all firms in all fee-blocks, transparent and easier to understand."
But the Association of IFAs (AIFA) says the move to a straight line recovery model for fees "neglects the true risk profile of firms".
Policy director Andrew Strange says: "There are many more appropriate risk indicators than firm size and we are disappointed that FSA has not considered this further.
"Fees must take account of the sector the firm operates in, and the overall systemic risk that sector poses to the economy. The use of regulatory dividends and risk-profiling of firms must be developed."
The FSA maintains it is targeting those areas where it is doing the most work.
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