Insurance Times readers explain why they have backed our Fair Fees campaign in their hundreds
Last week, Insurance Times launched an online petition for brokers to register their support for our ‘Fair Fees: Brokers won’t pay for banks’ campaign.
Since then, hundreds of readers have added their voice to our call for the FSA?to give a fair deal to professional general insurance brokers.
Over the past two years, GI brokers have faced a 48-fold increase in their annual levy to the Financial Services Compensation Scheme (FSCS), on top of a doubling in the minimum FSA fee.
We have called on the FSA, when it reviews the FSCS, to:
1. ring-fence professional insurance brokers from the rest of the financial services sector when establishing the new FSCS framework;
2. exclude the mis-selling of payment protection insurance (PPI) from the compensation scheme for professional brokers;
3. ensure that the fees and levies paid by brokers are proportional to the risks they generate; and
4. protect professional brokers from having to pick up the tab for the failures of the wider financial sector.
We also asked you to tell us why you signed up for the campaign. Your responses demonstrate the depth of your anger and concern about the effect that the huge increases in fees and levies will have on your business, some of which are already struggling to cope with the aftershocks of recession and rapid technological change.
This week we publish a selection of those responses. By far the largest number of comments reflect the widespread anger that GI brokers are having to pick up the tab for the mis-selling of PPI by credit brokers and financial institutions, including the high street banks.
The FSCS’s annual report for 2009/10 lays bare the impact of PPI mis-selling on the compensation scheme for general insurance intermediaries.
It shows that the vast majority of the compensation claims being paid out from the scheme’s GI intermediation pot were related to PPI. Over the last year, the volume of claims not related to PPI fell by a half.
These figures underline the unfairness of the way the FSCS is currently structured, and provides even more justification why the scheme must be overhauled.
We would like to say a big thank you to those who have already signed up for the Fair Fees campaign. And if you haven’t done so already, we urge you to add your voice now.
Sign our online petition or email us: firstname.lastname@example.org.
Having just had this year’s FSA, Financial Ombudsman Service and FSCS fee collected by direct debit from our account, one has to ask: what commercial organisation could implement such an increase?
Nigel Hucknall, managing director, Brooks Braithwaite (Sussex)
Our fees for the FSCS levy have increased 754% from last year. We do not and never have been involved in any PPI sale or advice. Increases of this nature are unacceptable, unjustified and unworkable in the current economic climate.
Christopher Wade, company director, Burgess Thompson & Richardson, Boston, Lincolnshire
We all need to stick together and protest.
David Riley, director, a&b insurance brokers, Stockport, Cheshire
I have never dealt with PPI insurance and don’t know any other broker who has. Why should brokers pay for something they don’t deal with?
David Jarrold, managing director, Campton Insurance Brokers (UK), Surrey
It’s quite simple. If my clients don’t like the quote I give them for their insurance, they can take their business elsewhere. I have no such luxury with the FSA: it’s pay up or we close you down.
Paul Phelps, company secretary, BIIA Ltd
I am a small local broker with four staff. My fees have increased by about 12.5%, which is very difficult, especially when business is declining.
I don’t know why brokers should compensate for something with which they have never been involved. We need a regulator that understands our business.
David King, Murray Burns & Company, Lincolnshire
The FSA regulation and treatment of the general insurance sector always has been a massive overkill. I find it unbelievable that we are being penalised for the actions of a different sector of the market that is quite able to fund the resources to deal with the consequences of its actions.
Why it should be spread across the entire market is another symptom of the FSA’s misunderstanding of the business it is supposed to regulate. I have no choice but to pay its fees … but I would rather give them to charity!
Graham Tompkins, partner, Kennet Insurance Brokers, Berkshire
My wife and I run a small brokerage in West Yorkshire. Last year we paid £535 to the FSA. Our fees this year are £1,517. We now work from home to save outgoings, but this hike in fees has taken away much of the saving we made.
Martin McVeigh, managing director, Fartown Insurance
We sell mainly travel insurance and boat insurance. We have never sold PPI and never will. Out of the small profit I made last year, between these costs and taxes, 70% has been taken away.
Nick Caldwell, managing director, Westfield Insurance Services, Guildford, Surrey