Brokers at risk of being asked to pay for other mis-selling scandals, chairman Mistry warns
Brokerbility is piloting an administration fee for its clients, which includes a contribution towards the Financial Services Compensation Scheme levy.
If successful, the administration fee could be rolled out across all of Brokerbility’s 35 brokers, which control nearly half a billion in premium income. An administration fee is a charge that is separated from the rest of the customer’s fee or commission.
Brokerbility chairman Ashwin Mistry said a potential start date was 1 November and that “the response has been very good so far. In terms of mid-term adjustments, clients with fees are more receptive than those paying on commission.”
Mistry believes brokers have suffered unfairly by having to pay for the costs of PPI mis-selling, even though most brokers don’t sell the product. But Mistry warned that there were other products that brokers could end up paying for in a potential mis-selling fallout, such as warranty insurance.
Mistry said: “I don’t think we completely understand the gravitas of the current liability on the pot because new and optional products are being dragged into it.”
An increasing number of brokers are considering an administration fee to offset the increasing burden of paying for regulation. Bluefin has introduced a £25-per-policy administration fee, and CCV and Jelf have not ruled it out if costs continue to escalate.