Compliance consultant Branko Bjelobaba has raised concerns about difficulties health and protection insurance intermediaries face in budgeting for the Financial Compensation Schemes Levy (FSCS) following the Financial Conduct Authority (FCA) launching its three year strategy.
Last week the FCA said it expected that actions taken to target failing firms early on in its three-year strategy would cause the levy to stabilise.
But Bjelobaba, principal at consultancy Branko and regulation and compliance consultant to the Association of Medical Insurers and Intermediaries (AMII), (pictured) told Health & Protection that payments for firms’ failure under FSCS have always concerned him.
“Health and protection insurance intermediaries, even if they fail, are most unlikely to see a call on compensation funding as premiums are always collected directly by insurers so there is minimal risk of exposure here,” Bjelobaba said.
“I really have never seen why very low risk sectors should cross-subsidise other higher risk ones.
“It is difficult to budget for this levy knowing not what the FCA wishes to do and it is most unfair of them to impose steep increases that could challenge the viability of firms and the planning they have already undertaken.
“I do hope the FCA understands the concerns of the sector and does something about it.”
But Bjelobaba also welcomed the regulator’s desire to prevent harm to customers.
“We have seen the FCA come out with pricing and product governance rules that make insurers assess the value of their products, including whether commissions are indeed commensurate with what advisers are having to do.
“I have never seen payment of much-reduced renewal commissions being totally in line with this and perhaps it’s time for a rethink.”
