Biba slams broker levy and presses for reform

Biba has vowed to keep pressing for reform of the Financial Services Compensation Scheme (FSCS) following confirmation of an interim levy on insurance brokers.

The FSCS has confirmed it will be raising a top-up levy of £16m from the general insurance intermediation class for the 2012/13 year, down from initial estimates of £20m.

The extra cash will pay for the high cost and volume of payment protection insurance claims handled by the FSCS.

But Biba head of compliance and training and incoming chief executive Steve White (pictured) said the trade body would still lobby to try to get brokers a better deal.

He said: “This confirmation of an interim levy reinforces our view that the funding model treats the professional insurance broker unfairly, and we are continuing to pursue this matter as a major lobbying issue.”

Biba said it had three main areas of concern, including:

• the separation of professional insurance bodies from the others in our sub-class;
• the extent to which brokers are responsible for related intermediary failures; and
• the ability of the FSCS to achieve recoveries in respect of failures where the film acted as agent of the insurer.

White added: “We have heavily lobbied both government and the FSA on this issue, however, despite almost 100 ministerial and MP meetings, 54 meetings with the FSA and 49 meetings with HM Treasury on the issue – the levy is going ahead.

“It is important to remember that although levy-call letters will be hitting the door mats in the next few weeks – the war is not over and we continue to fight in our members’ interests.”

Biba hopes to change the FSCS through European legislation, and is also calling on the government to launch a red-tape blitz for financial services.

White added: “We have long campaigned for brokers to be separated from the non-specialists in to their own sub-class. In our formal submission in response to CP12-16, a robust behavioural economic case was made for why professional insurance brokers should be separated in the FSCS funding model, and an affordable and sustainable alternative model was suggested.

“We still maintain that this alternative is a more prudent and equitable solution for a sector that makes a direct and in-direct contribution to UK GDP (gross domestic product) of 1%. This contribution should entitle professional insurance brokers to a more tailored response from the regulator.”