Insurance Times campaign gathers pace as one firm warns ‘this threatens our very existence’
Brokers are considering cutting staff to cope with the sharp increase in FSA fees.
Glasgow-based broker Calcluth & Sangster, for example, has seen its fees for general insurance rise to more than £8,000 this year from £2,000 last year, and life fees to more than £5,000 from £1,500.
“We are an independent broker employing 27 people in our area. We now have to look at redundancies and whether we can realistically continue to trade in our current form.” wrote Calcluth & Sangster director Stuart McGregor in an email to Insurance Times. “This threatens the very existence of both our companies – all for the compensation of a product [PPI] that we have never been involved in selling. It is a disgrace.”
Meanwhile, the FSCS fees for Grantham-based broker Mark Bate, which specialises in selling mobility scooter insurance to the disabled and elderly, rose to £16,821.20 for the current year from £942.53 last year.
As a result, the firm’s total FSA charges rose 312% to £24,724.03 from £6,002.21. In a letter to the FSCS, sales director Simon Oakes said the increase represented the wages of one-and-a-half administration staff without which, he argued, his business would run less efficiently.
“Were we forced to meet such an increase in our levy, we would have one of two options: either make a member of staff redundant, thereby reducing the level of service we are currently able to offer, or by again increasing our premium, which would seem like penalising the very people that the FSA is in existence to protect,” he said.
The FSCS announced on 29 March that the levy for the 2010/2011 year would be £148m, with more than £61m falling on the general insurance intermediation category to pay for increased payment protection insurance claims.
The FSCS’s Suzette Brows said: “We gave an indication that there would be a massive increase in the levy in this area a number of months ago. We try to give firms as much notice as possible.”
While the FSCS sets the levy, the FSA determines which companies should pay, based on their category. The authority plans to review the FSCS’s funding model this autumn.
Visit www.insurancetimes.co.uk/backfairfees to join the campaign.