Following months of lobbying, the British Insurance Brokers’ Association (BIBA) has received confirmation from the Financial Services Authority (FSA) that a review of the financial services compensation scheme (FSCS) will be carried out.

The review, which was confirmed following a meeting last week between BIBA and the FSA, is the result of ongoing lobbying from BIBA, who challenged that the broker funding and fees for the FSCS are unfair and do not properly reflect the low risk nature of general insurance intermediation.  

Eric Galbraith, BIBA Chief Executive, said: “I am delighted that a review has been confirmed.  We have been calling for changes to the funding of the FSCS and the way in which costs are allocated to various classes of regulated activity.  It is madness that brokers are potentially expected to fund compensation in the event of big banking failures such as Bradford and Bingley and I hope that this review will address this important issue.”

Steve White, BIBA Head of Compliance and Training, added: “We are unsure of the timescale of the review but this is a huge step in the right direction to protect our members. I will be inputting as much as possible into the review to ensure that the low risk nature of members’ business is fully represented.”

The FSA confirmed that the review would include the funding model - the composition of classes and sub-classes, the annual thresholds each class can be asked to pay, the allocation of levies among different types of firms, and the limits that apply to different types of FSCS levy. They will also look at the method of apportionment of levies to individual firms, including considering the case for risk based levies, and the treatment of both new entrants to the industry and those firms leaving the industry.

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Notes to editors

1. For further information please contact :

BIBA press office:
Leighann Burtrand, Communications Manager
020 7397 0223
burtrandl@biba.org.uk

2. About British Insurance Brokers' Association

The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.

BIBA membership includes 1700 regulated firms. Insurance brokers and intermediaries distribute nearly two-thirds of all UK general insurance. In 2007, insurance brokers and intermediaries generated £1.5 billion of invisible earnings and they introduce £22 billion of premium income into London’s insurance market each year.

BIBA is the voice of the industry, advising members, the regulators, the Government, consumer bodies and other stakeholders on key insurance issues.  BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards. BIBA works closely with the Chartered Insurance Institute to provide training to those working in the industry and actively participates in helping the industry and its customers deal with some of the major issues of the day.

BIBA members provide professional advice to businesses and consumers, playing a key role in identification, measurement, management, control and transfer of risk.  They negotiate appropriate insurance protection tailored to individual needs and operate to a very high standard of customer service with the aim of ensuring peace of mind, security, financial protection and the professional advice required.

To find your nearest BIBA broker visit the ‘Find A Broker' section of the BIBA website, www.biba.org.uk or call BIBA’s consumer helpline on 0870 950 1790