Brokers will have to contribute £2m to cover Financial Services Compensation Scheme (FSCS) claims in 2007/08– four times more than last year, the FSCS said this week.
The FSCS attributed the increase to the fact that claims payments had not been included in this year's levy, due to uncertainties in the volume of claims and the number of defaults.
It is predicting around 2,500 claims in 2007/08.
The increased levy will mean that a small broker is likely to pay a levy of around £17, while a medium sized broker will contribute £970, said a spokeswoman for the FSCS. The levy on larger brokers will be about £3,500.
Brokers were only brought within the jurisdiction of the FSCS after 14 January 2005, when statutory regulation began.
But insurers are likely to escape any levy, the FSCS said, as despite significant funding being required, there are "sufficient funds" to deal with anticipated claims against insolvent insurers.
'The number of financial services firms going bust has soared in the past year, mainly due to the high cost of complying with FSA regulation, according to professional services firm Deloitte.
It said financial services was one of the worst affected sectors with nearly 50% more firms going into administration than in the previous year – 71 in 2006 compared to 48 in 2005.
Deloitte highlighted the costs of meeting FSA and anti money laundering regulations and purchasing professional indemnity insurance as factors.
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