Wholesale brokers could face additional levies under plans to reform the Financial Services Compensation Scheme (FSCS).

The FSA is proposing the creation of a wholesale pool to cover high level losses within the scheme. The move could add a further annual £1bn to £2bn of funding to the FSCS.

The proposal is part of wider plans to overhaul the FSCS, which provides compensation to the customers of UK financial services firms if an authorised firm is unable to pay claims against it.

Under plans published this week, the FSCS would be divided into five broad classes – life and pensions, investments, general insurance, deposits and home finance.

Each class would have two sub-classes and above them there would be a general retail pool.

Biba said it was pleased with the proposals overall, but was not "overly keen" on the wholesale pool.

Steve White, Biba regulation and compliance manager, said: "We have some concerns about the formation of the wholesale pool and cross-subsidising.

"However, until we get to see the minutiae of any proposal we can't say one way or the other."

Although wholesale business is not capable of giving rise to claims on the compensation scheme, the FSA said it favours making it possible to have recourse to the wholesale sector for a proportionate contribution to funding the scheme.

"This is in recognition of the links between retail and wholesale business within the UK's financial services and of the benefit the wholesale sector derives from public confidence in the financial system as a whole," said the FSA.

Detailed proposals for the wholesale sector will be set out in a consultation paper which will be issued in approximately six months' time.