The Association of British Insurers (ABI) has attacked proposed reforms to a compensation scheme it calls “a vital safety net”.

The Financial Conduct Authority (FCA) is consulting on funding of the Financial Services Compensation Scheme (FSCS), the UK’s statutory compensation scheme of last resort, which can step in when financial services businesses are unable to pay claims against them.

Businesses pay levies to fund the scheme, but the rules have not been reviewed since March 2013 and “the scale and impact of FSCS levies has risen sharply for some”.

The FCA puts forward a range of options, including that insurers pay contributions towards intermediary claims.

ABI Director of Regulation Hugh Savill says insurers “already pay a significant contribution”.

“It is worth noting that no UK insurer has gone bust for many years,” he said.

“We are very concerned at the proposal for insurers to bear additional costs to guard against failures by intermediaries such as brokers and advice firms – something insurers have very little direct influence over.

“We see no justification for the blurring of responsibilities in this way. We will be engaging fully in the consultation, with a focus on challenging the rationale behind this idea.”

Responses to the FCA consultation paper must be made by March 31.