Daily briefing: Wednesday - Facing the consequences

A cautionary tale took top billing on insurancetimes.co.uk this morning. The FSA has announced a ban on insurance broker Kevin Dalgleish. His offence? A failure to pay £1,280.33 worth of regulatory fees and levies. The sum appears small in the context of running a business. Dalglish, according to the FSA final notice announcing its verdict, did not bother to appeal to the Upper Tribunal.

Dalglish’s is just one case. However, it begs the question how many other brokers are paying up their fees and levies while hanging on for dear life. Faced by what feels like a never-ending soft market, brokers are gearing up for another hefty increase in the Financial Services Compensation Scheme (FSCS) levy.

The FSA recently announced that next year's increase in the FSCS levy will not be as steep as first thought - 16% rather than the original figure of 56%.

But, given that this increase came on top of last year’s massive hike, this is likely to prove cold comfort when the bills start hitting the mats next month.

And despite mounting concerns about the levy, not only from insurance brokers but other quarters of the financial services community, the FSA seems in no hurry to speed up its review of how the FSCS is structured.

The regulator says that it is premature to make decisions on the future of the FSCS in advance of a wider-ranging EU review of financial services compensation schemes. But with the failure of firms like Welcome and Wilmslow Financial Services, both of which have gone bust since the beginning of this year, the strains will grow on the unreformed levy, increasing the case for the low-risk general insurance broking sector to be treated separately.

Perhaps if the watchdog sees more cases like Dalglish’s coming through, it will start to see the real world consequences of its procrastination.

One in, more out at Towergate

Since last Thursday, Towergate has been in celebratory mood after it pulled off a massive coup in hiring Aviva UK chief executive Mark Hodges as its new leader. The smiles down at Towergate headquarters in Maidstone may have turned to frowns last night, however, after we revealed that its commercial underwriting managing director Simon Read had made for the exit door, thought to be on his way to Gallagher International.

Today, there were even bigger developments as it emerged that Scott Banks, the boss of one of Towergate Underwriting's other key units, homeowners, is set to join Read to head up a new e-commerce underwriting unit at Gallagher. This, coupled with speculation that a team of up to 10 staff could also follow, will mean some rebuilding work will be on the cards for Towergate Underwriting chief executive Clive Nathan, who missed out on the top job to Hodges.

Turning point for Xchanging?

And more moves news at Xchanging, where Ken Lever has been named as permanent chief executive. His appointment follows a turbulent few months for the outsourcing specialist. In February, Xchanging had to report a £100m writedown in February amid a profits warning. Then, last month, the company announced the restructuring of its insurance business and the departure of its broking services managing director Artur Niemczewski after just eight months.

The question the market will be asking is whether there is more bad news in store at Xchanging, which plays such a central role in the London market, or whether today’s announcement marks the beginning of a new and more positive chapter in its fortunes.