FSCS set to charge brokers an extra £20m

The Financial Services Compensation Scheme (FSCS) is set to levy an extra £21m from insurance intermediaries in the first quarter of next year.

An FSCS newsletter said any extra charge would pay for an increased number of payment protection insurance (PPI) claims handled in 2012, especially coming from claims managment companies.

General insurers are likely to have an extra £15m added to their FSCS levy to pay for increased mesothelioma claims.

The newsletter said extra charges were likely, but that this was not certain.

Biba chief executive Eric Galbraith said: “Our members are already extremely concerned at the levies raised on them in respect of the failure of a number of large credit brokers and this latest development is another kick in the teeth for firms that have not been involved with PPI.

“We recently submitted a detailed economic report to the Financial Services Authority, prepared by Oxera, which makes a strong argument for separating the approximately 3,500 ‘professional insurance broking firms’ from the approximately 10,000 other firms in our sub-class and the methodology to do so.”

Biba head of compliance and training Steve White said: “The threat of an interim levy once again highlights the fundamental unfairness in the current funding model. We call on the FSA to reflect on the significance of the UK’s professional insurance broking sector and to use the Oxera report to build a more equitable model.”