Brokers have rejected proposals by the FSA to make them pay into a compensation scheme.
In its response to the FSA's consultation paper 04/04 on funding of the ombudsman and compensation schemes, the Institute of Insurance Brokers (IIB) said it "is totally opposed to the FSA proposal that the level of general insurance mediation compensation should be the same as protected contracts of insurance".
"When an authorised insurer fails, other insurers are able to pass Financial Services Compensation Scheme (FSCS) levies to policyholders as part of premium pricing. The FSA's proposals for brokers to be subjected to similar levies, would in effect result in them acting as excess of loss reinsurers, for which they will receive no premium or, means of point-of-sale financial recovery, in respect of professional indemnity insurance (PII) shortfalls faced by brokers with inadequate indemnity limits," said the IIB
