The ICS's loan facility, agreed with a number of City banks, expired on 31 March. It has so far been unable to extend it for the current year. A separate pounds 10m overdraft arrangement may also be under threat.
The loan problems are the latest twist in a legal battle between Sun Life, a Bristol-based insurance company, and the Personal Investment Authority, which is charged with raising the money.
Sun Life is seeking a judicial review on whether it must pay towards the regulator's levy on its members. It argues that it should not have to pay on behalf of firms that were not members of the PIA when they went into default. Its legal challenge has led to some insurers saying they may withhold their share of the PIA's pounds 16m levy on them, which is expected to be announced in the next few days.
David Cresswell, investor relations manager at the ICS, said yesterday: "Every year, we arrange for a loan facility from a group of banks. We do this even though we have not felt the need to call on it in all the years it has been arranged.
"This is because whenever we pay out compensation, we announce the amount we think we will need. The regulators then collect the money.
"Our loan facility expired on March 31. We are currently in discussion with a number of banks on whether it can be renewed. There will be banks who will consider very carefully whether to extend a loan to us in a situation where they are not sure whether the money would be repaid.
"We currently have about pounds 8.5m of the overdraft facility available to us, and estimate it will serve us for another six months. It may be that our bankers will be having similar thoughts about that.
"We do not want investors to worry. But it is the case that we receive hundreds of calls from people who ask us whether they would receive compensation for bad advice even before making an investment. We do not want a loss of confidence in the market."