Brokers are paying nearly ten times as much in regulatory levies as they were two years ago, new research by the Institute of Insurance Brokers shows.
The IIB figures, presented at the latest session of the All Party Parliamentary Group on Insurance’s inquiry into the Financial Services Compensation Scheme, shows that a broker with an annual income of £500,000 has seen its FSCS levy increase from £419.01 in 2009-10 to £4,104.28 in the current financial year- a rise of 979%.
The FSCS levy on a broker with an income of £1m per annum has increased from £175 to £1,649.28, while for those with an income of £5m the figure has increased from £875 to £8,246.39.
The IIB’s analysis also shows a massive jump in the scale of the levy demanded by the Financial Ombudsman’s Service, which has increased from £155 last year to £824.64 for a firm with an annual income of £500,000.
According to the IIB analysis, once a cut in FSA fees have been taken into account, brokers are paying just over twice as much to regulators as they were in 2009/10.
It shows that a firm with an annual income of £500,000 has seen its total fees and levies increase from £2,677.04 in 2009/10 to £6,515.07 in the current financial year. For a broker with an annual income of £5m, the figure has grown from £25,516.25 to £58,246.39.
In its presentation to the all party group, the IIB says: “The IIB believes there is a case for an immediate and urgent review of the FSCS funding arrangements with a view to ring-fencing the liabilities of deposit takers and, for the purpose of the compensation scheme levy, separating professional insurance brokers from opportunists selling insurance on the back of other products and services.”
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