Emma RadmoreFCA has published a set of proposals designed to improve transparency in the multi-occupancy leasehold buildings insurance market. It plans to define leaseholders as “customers” of buildings insurance, and to require insurance firms to act in leaseholders’ best interests. Insurance firms would be banned from recommending a policy based on commission or remuneration levels.
Following further research, FCA has also noted that the average per policy broker commission rose by 46% over the period of its review, and now expects brokers to stop paying commissions to third parties immediately, if they have no appropriate justification for doing so under FCA’s fair value rules.
The proposed changes would introduce new definitions into FCA Rules and would create new sections in SYSC on remuneration and ICOBS on disclosure.
FCA’s proposals are also supported by the Department for Levelling Up, Housing and Communities, which is to ban payment or sharing of insurance commissions with property managing agents, landlords and freeholds.
Consultation closes on 9 June 2023, and FCA intends to publish its feedback and final rules in Q3 2023.