The FCA has confirmed new measures to support leaseholders in the
multi-occupancy buildings insurance market.
From the new year, insurance firms will be forced to act in
leaseholders’ best interests, treat leaseholders as customers
when designing products and will be banned from recommending an
insurance policy based on commission or remuneration levels.
Insurers will also be required to ensure that their insurance
policies provide fair value to leaseholders and provide important
information about their policy and its pricing, including the
detail of any commission paid, for leaseholders.
The FCA’s action follows its review of the multi-occupancy
buildings insurance market, which found that leasehold buildings
insurance premiums had risen significantly since the Grenfell
tragedy, with leaseholders facing substantially higher costs and
poor value.
Sheldon Mills, Executive Director of Consumers and
Competition, said:
"Insurance firms must now act in leaseholders’ best interests and
ensure that their policies provide fair value.
"Our reforms will help to strengthen the insurance market by
providing new protections for leaseholders. We will not hesitate
to take action if firms breach these rules."
Following a review into broker remuneration practices, the FCA
expects brokers to immediately stop paying commission to third
parties (including property managing agents and freeholders)
where they do not have appropriate justification and evidence for
doing so in line with our rules on fair value.
The FCA will undertake further reviews across various products
and will consider the full range of regulatory tools available to
it as this work is progressed.
In addition to these measures, the Department for Levelling Up,
Housing and Communities has announced that it intends to ban the
payment or sharing of insurance commissions with property
managing agents, landlords and freeholders. The FCA will work
with DLUHC to ensure that this action is fully delivered,
including changing FCA rules if required.
Notes to editors
-
Read PS23/14
- In April the FCA consulted on changes
to its rules to improve how the multi-occupancy buildings
insurance market operates for leaseholders. The FCA also
published a multi-firm review of broker
remuneration practices.
