We wanted to take this opportunity to write to you in relation to some important changes to FCA rules surrounding residential multi-occupancy building insurance.
You will no doubt be aware that from 31st December, intermediaries will be required to provide additional information to certain customers purchasing property insurance covering multiple properties in order to protect leaseholders (stakeholders) who are not part of the insurance purchase process.
We will be sending out a new document titled “Leaseholder Policy Information” with all residential and commercial let policy documents as it will be impossible for us to know when it will be required. You should be aware that you also have responsibilities under these new rules.
This regulation is likely to affect and be of interest to:
- regulated insurers and intermediaries
- industry groups and trade bodies
- unregulated firms involved with multi-occupancy buildings, such as property managing agents)
- freeholder owners who are landlords of multi-occupancy buildings
- leaseholder representative groups and individual leaseholders
Our document will assist you in providing the required information to your customers but in most instances will not be suitable to send out in the form provided as it may not contain all of the information required.
Responsibility for producing the information will be split between the insurer (us) and the intermediary (you). We will be responsible for providing the policy summary and pricing information. You will be responsible for producing final remuneration, conflicts or interests and placing and history information. The information provided should include:
- A summary of the features of the policy, including main benefits, coverage and exclusions of the policy, duration and insured sum. Our document references the policy schedule in this regard.
- The policy premium. Where the policy covers a portfolio of buildings, firms must disclose the premium at building or dwelling level. Our document breaks down the premium between properties as required.
- The remuneration which any authorised intermediaries received for arranging the insurance, as well as remuneration they pay to other parties including unregulated PMAs and freeholders. Our document breaks down the total remuneration including our commissions, your commissions and our placing costs. It will also include both our fees and any additional fees which you have declared to us as part of the quote process.
- Information about potential conflicts of interests, such as ownership links between you and the insurer, and about the insurers with whom you may place the policy. You will be required to provide this information.
- The number of alternative quotes you have obtained (with further details of these to be provided on request) and a brief explanation of why they have proposed or recommended that the policy is in the interests of both the freeholder and leaseholders. You will be required to provide this information.
It is more likely to be required where freeholders purchase a policy and pass on the costs as part of a service charge but will also be required in other instances. It will be your responsibility to ascertain whether you need send this information.
More details can be found in the FCA’s final paper on the subject which can be found here: https://www.fca.org.uk/publication/policy/ps23-14.pdf.
Should you have any questions relating to this, please feel free to respond directly to this email, or alternatively call our office on 01702 411200.
