Brokers, MPs and trade bodies line up against the regulator
The industry has joined forces in a last-ditch attempt to stop the FSA imposing six-figure increases in fees.
The regulator’s consultation on the plan to raise an extra £117m in 2009/10 closes next Monday.
Brokers are set to lobby the FSA over the proposal – which will double fees for some large and medium-sized firms – designed to pay for the damage caused by the economic crisis and the bailout of major banks.
Biba has joined with the Association of Independent Financial Advisers (AIFA) to campaign against the hike.
It is urging brokers to respond to the FSA’s Consultation Paper CP09/7 before the 6 April deadline.
Biba has also called on brokers to send their responses to MPs. The campaign is believed to have received support from senior parliamentary figures.
Leading brokers have condemned the planned increases, saying the timing could not be worse.
Darryl Clark, group company secretary and risk management director at Towergate, said many brokers might have to take drastic action to pay the fees.
“We are looking at a near doubling of our fees ... all affected brokers are facing an unbudgeted increased expense at a time when they can least afford it. Ultimately, it will result in a need for most to cut more costs or increase turnover to fund it. For a broker facing, say, a £10,000 increase, that could typically mean finding an additional £250,000 of gross written premium.”
He said it was “iniquitous” that insurance companies had to subsidise banks.
Steve White, Biba’s head of compliance and training, said it was “unfortunate” firms not involved in creating the economic downturn would be severely affected by it.
The regulator’s fee proposals, which include levies for the Financial Services Compensation Scheme and the Financial Ombudsman, will not affect firms that have an annual income of less than £100,000. Their fees will be frozen at £450 or less.
The fees increase for larger firms will depend on their income. Companies with turnover of more than £20m face a rise of up to 70%.