Insurance brokers need to be ready for the implementation of a levy bill that is due to arrive in early February.
That is the message from the British Insurance Brokers’ Association (BIBA), which has issued a warning to its members about the additional Financial Services Compensation Scheme (FSCS) bill that represents a supplementary levy on top of the annual FSCS levy and comes on the back of the FSCS life and pensions sub-class breaching its limit.
“This interim levy is an unfortunate consequence of having a single Financial Services Compensation Scheme designed to fully protect consumers,” said Steve White, BIBA CEO. “This is the first time that an interim levy has been applied in this manner. This is another example of insurance brokers picking up the costs for businesses which we have no control over. We continue to be alive to the issues that members face with the cost of regulation and the impact this has on productivity.”
Furthermore, it is expected that the invoice brokers receive for 2019/2020 levies, which are finalised in April and issued in July, will be higher than last year’s – that’s because of a change in the financial year at the FSCS meaning the previous bill was for nine months only but this time around will represent a full 12 months.
“Increasing and additional unbudgeted FSCS bills are the last thing that brokers need during such uncertain times,” said BIBA head of compliance and training David Sparkes. “In the past members have told us that FSCS increases have resulted in delayed or cuts to investment and a reduction in expansion plans.”
Due to changes to the funding model that applies from the 2019/20 year, insurers will now need to contribute to the intermediary sub-class for the first time. With pure protection intermediaries being added to the general insurance distribution sub-class – meaning fees are spread across a larger number of firms – members should be asked to pay a proportionately reduced standard annual contribution, even where the sub-class cost is increased.
Now BIBA is urging brokers to review their budgets and prepare for the bills, which will be due within 30 days of invoice.
