Biba adds backing to campaign as brokers warn that eight-fold rise could be lethal to firms
Insurance Times has launched a campaign for the FSA to give a fairer deal to general insurance brokers when it sets its fees and levies.
The campaign has been triggered by this year’s massive hikes in FSA charges, the bills for which have been landing on brokers’ doormats in recent weeks. IT has been deluged with letters from professional brokers, expressing their outrage at the scale of the increases.
The biggest hikes have been for the FSCS (Financial Services Compensation Scheme) element of the fee, which has seen an eight-fold jump since last year, largely as a result of having to pay compensation to those mis-sold payment protection insurance. Brokers have warned that firms could go under as a result of the latest hike in FSCS fees, which follows a six-fold increase in 2009-10.
The FSA has promised to conduct what it has described as a “fundamental review” of the way the FSCS works. Our ‘Fair Fees’ campaign calls on the FSA, when it publishes its draft document on the future of the FSCS, to consult on:
• ring-fencing professional insurance brokers from the rest of the rest of the financial services sector when establishing the new framework for the FSCS;
• excluding the mis-selling of PPI from the compensation scheme for professional brokers;
• ensuring that the fees and levies paid by brokers are proportional to the risks they bear; and
• protecting professional brokers from having to pick up the tab for the failures of the banking sector.
Biba chief executive Eric Galbraith said: “The unfairness of the current FSCS funding model continues to be Biba’s leading lobbying issue. We are part of the FSA group reviewing the FSCS and will lobby strongly for this inequality to end. We therefore are delighted to lend our support to the Insurance Times campaign.”
Broker Network chairman Grant Ellis also backed the campaign. He said: “I fully support the Insurance Times campaign and urge brokers to make their voices heard.”
Hoban under pressure to address fees issue
Insurance Times has learnt that Jeremy Hunt, secretary of state for culture and the Olympics, has written to financial services minister Mark Hoban about the impact of the FSCS levy hike.
Hunt, who has been widely tipped as a potential future leader of the Conservative Party, has requested Hoban’s views on concerns about the increase raised by his broker Craig McGowan, who is a constituent.
McGowan complained to Hunt that his FSA fees have increased more than eight-fold from £149 last year to £1,149 this year, largely fuelled by the increased FSCS levy.
He writes: “Small businesses like ours are just not going to continue to survive at this rate.”
A Treasury spokesman told Insurance Times that Hoban could not comment on the FSCS issue because it is an operational issue for the FSA.
Fair fees: Brokers will not pay for banks
This week, Insurance Times kicks off an intensive campaign to ensure a fair deal for the broking sector when the FSA reviews its fees and levies.
To help get the message across loud and clear to decision-makers, we want to hear from as many of you as possible.
Keep on sending in your stories about what the levy hike will mean for your businesses, which can be read in full by clicking on the Fair Fees button on the Insurance Times home page. We will also be lobbying in parliament itself.
And, of course, we will continue to provide top-notch coverage online and in print on why brokers need a fair deal.