Credit card companies have hit brokers since the collapse of Independent Insurance by clawing back premiums.

The Institute of Insurance Brokers (IIB) says that it is unfair that premiums properly passed to the insurer should now be debited from broker accounts following refunds to policyholders from the card companies.

The credit firms, in turn, were able to reclaim monies from brokers as part of their standard merchant agreements.

It says that brokers are carrying the can because the Financial Services Compensation Scheme (FSCS) had actively encouraged people to claim refunds as, if a third party pays, the scheme does not have to compensate.

In a written reply to Lord Hunt, who had been enlisted to help the IIB request for justice on behalf of the brokers, economic secretary Kitty Ussher said: "This was a result of commercial terms agreed by the broker with the credit card provider and – indirectly – the broker’s recommendation of failed insurer."

IIB director general, dumbfounded by this reply, said it was "an absolutely outrageous allegation made under the signature of the minister".

He went on to say his "quest for justice" would go on.

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