Many brokers face struggle to survive, says Biba boss

Many brokers will struggle to survive unless the structure of the FSA’s compensation scheme is reformed, Eric Galbraith has warned.

The Biba chief executive said the dramatic hikes in FSA fees 2010-11 highlighted the inequality of the current regime for funding the Financial Services Compensation Scheme.

He said "BIBA has been inundated with calls from members who are incensed and ready for a fight. The increase in the FSCS levy on intermediaries is totally unjustified. It is not the failure of insurance brokers that is causing this massive increase in the cost of regulation"

"The fault actually lies with the failure of firms who’s core business is not insurance intermediation and with the FSA who have consistently failed to adequately police the sale of this product. The cost of the mis-selling of PPI is that insurance brokers are facing 48 fold increases in their FSCS fees from 2 years ago, this proves the structure of the compensation scheme is totally flawed”.

“It gets worse. Just wait until the banking failures have been assessed because the current compensation fund has a cross-subsidy with banks. Unless we can change the structure of the FSCS many brokers will struggle to survive”

Q&A: FSCS fees explained - click here to read.