The British Insurance Brokers Association (BIBA) has criticised as “totally disproportionate” a plan by the UK regulator to impose a 10% hike on fees paid by UK financial services firms.

The Financial Services Authority (FSA) proposes an annual funding requirement of £454.7 million ($800.6 million) in 2010/11, up from £413.8 million ($728.6 million) previously.

Over the past year the FSA has hired an additional 280 staff to bolster its supervisory capacity, and claims extra funds are required to support the introduction of the Solvency II regulatory framework in 2012.

BIBA CEO Eric Galbraith has welcomed FSA plans to introduce a fee structure based on individual company risk, but says the overall cost of regulation remains “totally disproportionate in relation to the low risk” posed by insurance brokers.

“The proposal to increase the minimum fee from £450 ($792) to £1000 ($1761) is overwhelmingly rejected on the basis that the FSA’s fees and levies are vastly more than they should be for regulating general insurance brokers,” he said.