The FSA has confirmed that it plans to introduce application fees for transfers of insurance business under Part VII of the Financial Services and Markets Act 2000 (FSMA).This proposal was first mooted in November 2007, in Consultation Paper 07/19 (CP07/19), when the FSA stated that due to the increasing costs of completing a Part VII transfer (in particular the preparation of a report and attendance at court) an application fee of £18,500 for life insurers and £10,000 for non-life insurers could become payable from June 2008.

Responses to CP07/19 were published in CP08/2 (found here). Whilst the comments were largely supportive of the idea, further clarification was requested on how the application fee would work in practice and whether the fees would apply to the transferor, transferee or both.

In Handbook Notice 75, released on 28 March 2008 and available here, the FSA confirmed that due to the responses to CP07/19 and CP08/2, further consultation was required. The draft rules will therefore be published in the FSA’s April Quarterly Consultation Paper and interested parties will be invited to submit their responses to the proposals.