FSA's hike in fees to hit customers

Insurers warned of a hike in premiums for customers yesterday as the City's watchdog hit the financial services industry with an inflation-busting 15.6 per cent rise in annual fees.

The Financial Services Authority's annual funding requirement has jumped by nearly £78m to £578m as the regulator faces the added costs of splitting itself up into two bodies from 2013 and overhauling its IT.

Including the costs of the Financial Services Compensation Scheme, the total bill for financial services firms will top £1.2bn. The extra cash demanded by the FSA also includes a £10.3m pot to give the regulator's leading staff pay rises after a two-year salary freeze. Otto Thoresen, of the Association of British Insurers, lashed out at the FSA's demands for a "massive increase" when the industry faces increased costs.