Tuesday 5 July 2011
Financial Services Compensation Scheme
The Petition of members of the British Insurance Brokers’ Association (BIBA),
Declares that the petitioners believe that the Financial Services Authority (FSA) should urgently accelerate its consultation on the fundamental review of the Financial Services Compensation Scheme (FSCS), to ensure that new rules are in place for April 2012 so that general insurance brokers do not see further disproportionate levy increases; and further declares that the 3,500 full time “insurance brokers” should have separation from the other “secondary sellers” in the insurance intermediary sub-class.
The Petitioners therefore request that the House of Commons urges HM Treasury to accelerate the FSA’s review of the FSCS consultation with immediate effect.
And the Petitioners remain, etc.—[Presented by Jonathan Evans, Official Report, 13 June 2011; Vol. 529, c. 609.]
Observations from the Chancellor of the Exchequer, Treasury:
The Government thank the members of the British Insurance Brokers Association (BIBA) for their petition on the funding structure of Financial Services Compensation Scheme.
The Financial Services Authority (FSA) is responsible for the funding arrangements for the FSCS, and consulted with the industry before introducing the current funding rules in 2008. These rules specify the levies that may be collected from each class of firm and how levies should be split between individual firms within each class of related authorised persons. The FSCS is then responsible for setting levies on firms within these rules.
The Government recognise the need for businesses to have certainty with regards to their regulatory obligations to enable them to plan effectively. However, the Treasury has strictly limited powers in relation to the FSA. In particular, the Treasury does not have the power of direction over the FSA and cannot intervene in its day-to-day activities, including with regards to the funding of the FSCS or the timing of their review.
The ongoing debate in Europe on compensation schemes has led the FSA to postpone the public consultation phase of their review until the outcome of this debate is known. Once the European debate is clearer, the FSA will proceed to public consultation where they will take all relevant views into account, including the concerns of BIBA members.