UK brokers have threatened to respond to a sharp rise in regulator-imposed levies with an industry-wide boycott.

Institute of Insurance Brokers CEO Barbara Bradshaw told insuranceNEWS.com.au that some brokers are facing an 800% increase in fees used to fund the Financial Services Compensation Scheme.

“There has been talk about a boycott by not paying the fees, but one has to remember that the Financial Services Authority (FSA) has the power to close a business down,” she said on Thursday.

British Insurance Brokers’ Association Head of Compliance and Training Steve White told insuranceNEWS.com.au the hike in costs is unacceptable.

“UK intermediaries pay substantially more in regulatory costs than our peers elsewhere in Europe,” he said. “We are calling on the new government to ensure that the regulation of our sector is appropriate, proportionate, and cost-effective.”

As reported last month, the rise in compensation scheme costs follows widespread mis-selling of payment protection insurance (PPI) over the past three years, with claims forecast to reach £61 million ($107 million) in 2010/11.

General insurance brokers must pay the increased fees despite few of them having any involvement in selling the product. But they occupy the same “sub-class” as other general insurance intermediaries – including loan companies that sell PPI alongside personal loans.

Both national broking bodies have moved to dissuade members from boycotting payment of compensation levies, pointing out they are a legal requirement.