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12 July 2023 - Multi-occupancy building insurance - Oral evidence

Committee Treasury Sub-Committee on Financial Services Regulations
Inquiry Multi-occupancy building insurance

Wednesday 12 July 2023

Start times: 2:00pm (private) 2:15pm (public)


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Treasury Sub-Committee to investigate multi-occupancy building insurance and rip-off commissions 

The Treasury Sub-Committee on Financial Services Regulations will examine the Financial Conduct Authority (FCA) consultation on reducing the cost of multi-occupancy building insurance at 2.15pm on Wednesday 12 July. 

Meeting details

At 2:15pm: Oral evidence
Inquiry Multi-occupancy building insurance
Member at Financial Services Consumer Panel
Chief Executive at Leasehold Advisory Service
At 3:15pm: Oral evidence
Inquiry Multi-occupancy building insurance
Executive Director, Consumers and Competition at Financial Conduct Authority
Director, Insurance and Conduct Specialists at Financial Conduct Authority

The FCA was asked by the Secretary of State for Levelling-up, Housing and Communities to review how the market for multi-occupancy building insurance operates. The review aimed to shed light on the causes of steep price rises.  

The review, published in September 2022, found the existence of extremely high commissions being paid by insurance companies to freeholders, property managing agents and insurance brokers, which ultimately had to be paid by leaseholders of the properties, who had no say in choosing the insurance provided.  

The FCA also found availability of insurance for multi-occupancy buildings has fallen significantly, premiums have doubled between 2016 and 2021 and broker fees have risen. There were also concerns on customer service and transparency.  

The FCA’s consultation proposes new disclosure rules for insurance companies and intermediaries requiring them to provide leaseholders with a policy summary, clear pricing information and the total renumeration received by the intermediary.  

It also proposes including leaseholders as ‘customers’, meaning insurers and brokers would need to show how they have considered the interest of the leaseholder when designing and pricing their products and ensure the product provides fair value. 

Likely areas of questioning

The Sub-Committee is likely to ask witnesses about the nature of commissions within the insurance sector, transparency for leaseholders, and whether treating leaseholders as customers will improve consumer outcomes. They may also discuss whether the proposals will address high post-Grenfell premiums and what legislation is required to correct the harms the FCA identified.  

Location

Room 18, Palace of Westminster

How to attend