The Financial Services Compensation Scheme (FSCS) today issued a statement in response to brokers concerns about levies the body will be charging firms to cover compensation payments in 2005/06.

In January the FSCS published its plan and budget for 2005/06, with indicative forecasts for possible levy requirements.

The FSCS said today that it stressed at the time that the forecasts made in the plan and budget were only indicative and that the figures were subject to change as new information was received. The actual levies are to be set in March.

FSCS chief executive Loretta Minghella said: “I am very clear that (the) FSCS should strive to be as efficient as possible in the handling of claims, and to base our levies on reliable information. We will only levy if it appears reasonable to do so in the light of the information we have at that time.

“I would like to personally reassure firms that we are not looking to build up a “fund” for future years but are only looking to levy the amounts we need for the levy period, which runs to 1 July 2006.

“We also recognise that it is in the nature of a compensation scheme that firms which have done nothing wrong have to pay for the mistakes and misdeeds of others.

"However, as the UK's fund of last resort for customers of authorised financial services firms, we have a duty to ensure that FSCS is properly funded to be able to deal with claims that we believe we will have to handle in our levy period.

"My challenge is to strike the right balance between the needs of consumers and the burden our work places on industry.”