BOE confirms FMI supervision fees for 2026/27
The Bank of England has published its policy statement confirming fee rates for financial market infrastructure supervision in 2026/27. The statement provides feedback to responses received during the consultation period and details the updated fee structure.
Levies rise within CPI constraint
The Bank of England's operational costs are largely recovered through various levies and fees, with approximately 97 percent funded this way.
For 2026/27, the Bank's operating budget and core levies are constrained to increase by no more than CPI, with an overall 3 percent rise compared to 2025/26. The total Bank of England Levy is set at £700 million for 2026/27, reflecting both operational policy costs and a significant 'Cost of Transition' adjustment.
This adjustment, amounting to £307 million for 2026/27, is related to expected interest differentials from the legacy Cash Ratio Deposit (CRD) scheme.
The overall total levies and fees are budgeted at £1,289 million for 2026/27, representing a 9 percent increase from the previous year, with the core levies growing by £20 million or 3 percent, within the CPI growth constraint.
The PRA Levy is set to decrease by 1 percent, while the FMI Levy will see a 3 percent increase.
Transitioning from CRD funding
The 'Cost of Transition' adjustment within the Bank of England Levy stems from the shift away from the legacy CRD scheme.
Under the old system, financial institutions held non-interest-bearing deposits at the Bank, which were reinvested in gilts to fund policy functions.
In March 2024, these deposits were converted into remunerated central bank reserves.
The transitional adjustment mechanism ensures the Bank's funding is insulated from market interest rate movements; if Bank Rate exceeds the return on the legacy CRD gilt portfolio, the financial system returns the 'excess' interest to the Bank via this adjustment.
The consultation on the fees regime for FMI supervision for 2026/27 received five responses, with positive feedback on the earlier timing but questions regarding cost uncertainties and the Bank's approach to charging for policy and research costs.
The Bank also confirmed an extension to the phased recovery period for UK CCP rulebook costs.
Clarity at a cost
The updated fees regime provides greater clarity on the Bank of England's funding model, particularly with the detailed 'Cost of Transition' mechanism.
While aiming to stabilize the Bank's finances against market rate volatility, the significant increase in the overall BoE Levy will be a notable cost for the financial industry.
Firms will need to carefully integrate these new fee structures into their budgeting, especially given the ongoing complexities of FMI supervision and the phased recovery of rulebook costs.