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Insurance brokers told to hand over additional £16m in fees to FSCS

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  • 06/02/2019
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Insurance brokers told to hand over additional £16m in fees to FSCS
Insurance intermediaries have just a month in which to pay £16m in supplementary levies to the Financial Services Compensation Scheme (FSCS).

 

Last month the FSCS announced that it was having to raise additional levies for this tax year because of the rising cost of claims against pension advisers, as well as the failures of the Dial-a-Cab credit union and Alpha Insurance.

It has now confirmed that while a significant chunk of the additional levy will be funded through “class surpluses”, it is general insurance brokers that will be hit with the largest invoices for new payments, totalling £16m. These will be sent out this month, and are payable within just 30 days of receiving the invoice.

Steve White, the chief executive officer of the British Insurance Brokers Association (BIBA), said this was the first time that an interim levy had been applied in this way, warning: “This is another example of insurance brokers picking up the costs for businesses which we have no control over.”

Mortgage brokers enjoy reduced levies for next year

The FSCS has previously announced that it expects the total levy for the industry for 2019/20 will come to £516m. It noted that this is £58m less than the £574m it would have charged in 2018/19 if the levy had covered a full 12-month period, rather than the actual nine-month period covered.

Mortgage brokers will be paying just £4m towards that budget, a significant reduction from the £22m intermediaries paid in 2018/19. The Association of Mortgage Intermediaries declared this was because they would no longer be paying towards pension and investment claims, something for which it had been campaigning for some time.

Robert Sinclair, chief executive of AMI, said: “This has been a two year journey to achieve a fairer outcome for all mortgage brokers and it will have a significant impact on this year’s fees.”

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