Final FSCS figure could force brokers to consider staff cuts

Brokers have reacted with outrage to the latest increase in their Financial Services Compensation Scheme (FSCS) levy.

Announcing its budget for 2011/12, the FSCS last week set its draft levy for insurance intermediaries at £93.5m, up from the £61m for the current financial year.

The funding requirement has been issued for consultation with the FSCS, which is due to determine the final figure next month.

But the FSCS has admitted in its draft budget that the final figure could increase because of the spiralling increase in payment protection insurance compensation payment.

Last year, the levy on general insurance intermediaries increased from an initial figure of £50.5m to the final sum of £61m.

Ataraxia chief executive Stuart Randall said: “Brokers will be squeezed through no fault of their own. If the sums don’t add up, you have to do something and brokers will have to look at their overheads of their business, which will include staff.”

Insurance Times’s ‘Fair Fees: Brokers won’t pay for banks’ campaign is urging the FSA to give general insurance brokers a fairer deal when it carries out its delayed review of the FSCS.

Click here to sign the online petition.

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