UK brokers are up in arms over a decision by the Financial Services Authority (FSA) to delay its review into the way the Financial Services Compensation Scheme (FSCS) is funded.

Speaking at the Insurance Institute of London lecture at Lloyd’s last week, FSA CEO Hector Sants said the FSA is waiting for the UK Government’s wider review of the FSCS to conclude before restarting its own work on the levy.

Last year the FSCS was included in the Government’s regulation review, which is not expected to conclude for two years.

The decision follows a recent 50% increase in the levy brokers are required to pay to the FSCS for 2010/11, which came on the back of nine-fold increases last year.

The increases are the result of escalating compensation claims due to the mis-selling of payment protection insurance by credit brokers. They are currently included in the same funding pool as general insurance intermediaries, even though very few general insurance brokers sell this type of insurance.

UK broker organisations have been lobbying the FSA to establish a separate funding pool for general insurance brokers and the FSA had committed to producing a consultation paper to review funding options.