Insurance firms typically have 30 days to pay up on supplementary levy charges
Premium Credit is offering payment options to help firms pay the Financial Services Compensation Scheme’s (FSCS) levy.
This follows the FSCS sending invoices to brokers and insurers to contribute towards a supplementary levy - this is to help raise £78m of additional funding for the life distribution and investment intermediation (LDII) class.
If the supplementary levy invoice is not paid to the FSCS by the due date, an administrative fee of £250 will be charged, plus interest at a rate of 5% above the official bank rate.
The FSCS is helping smaller firms with a supplementary levy bill of less than £10,000 by giving them 90 days to pay - all other firms have 30 days to pay the levy.
The premium finance provider predicts that increasing numbers of insurance firms will consider spreading the cost.
It advised businesses wishing to pay the levy in instalments to partner with a specialist provider.
Trade association Biba referenced the supplementary levy in its recently published 2021 manifesto, which is themed around ‘resilience’.
Spreading the cost
Roger Brown, chief commercial officer of Premium Credit Specialist Lending, said: “Over the last 15 years, we have helped firms fund these additional levies and their main fees by offering a credit facility to meet the cost through convenient monthly payments rather than having to pay the amount in one, large transaction.
“More and more FCA regulated businesses are using our payment facility to help preserve valuable cash flow, particularly during the tough trading conditions of late.
“With the country and the world in the grips of a pandemic, some regulated businesses may need to spend their cash reserves in different ways. The opportunity to spread the cost of this additional levy over a number of smaller payments has never been more welcome, helping firms pay on time and avoid incurring additional charges and interest from late payment.”
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