Requirements of FCA New Rules for Multi-Occupancy Buildings Insurance



The FCA proposed that firms, both insurers and intermediaries, should ensure better outcomes for leaseholders in the multi-occupancy building insurance market by increasing transparency of disclosure for leaseholders which requires that the products are consistent with the needs and interests of leaseholders and other policy stakeholders, and priced in a way that provides fair value, and the remuneration practices do not lead to poor outcomes.


The rules will come into force on 31 December 2023.


Which contracts do the new rules apply to?

The disclosure rules only apply to multi-occupancy building insurance policies for residential leaseholders. Firms will not need to provide disclosures intended for commercial leaseholders.

Also, the new rules will only apply to contracts which are concluded once the rules have come into force from 31 December 2023 onwards. More information can be viewed on: PS23/14: Multi-occupancy building insurance: Feedback to CP23/8 and final rules | FCA


Our actions to the new rules

We at CTIUK shall take the following stance, and advise our agents (or intermediaries) to take the same, to disclose the relevant information to the customers according to the new rules (Rule 3.3 Content of the disclosure):

  • Policy Information: Policy wording, summary and schedule should be passed to the insured and the insured should pass the documentation onto any leaseholder of the building in relation to which the Multi-Occupancy Building Insurance contract provides cover.
  • Pricing Information: Where the policy covers a portfolio of buildings, the premium at building or dwelling level should be disclosed.
  • Remuneration Information: The remuneration received for arranging the insurance, as well as the remuneration paid to other parties including Property Management Agents (PMAs) and freeholders should be disclosed.
  • Conflict of Interest Information: Any ownership, business interests or links to the insurance arrangement should be disclosed. CTIUK has no ownership or financial interests or links with any of our agents or PMAs.
  • Placement Information: Intermediaries should disclose the number of alternative quotes they have obtained and a brief explanation of why they have proposed or recommended that the selected policy is in the interests of both the freeholder and leaseholders.


The new rules also require that firms should not simply use percentage-based commission rates to price the insurance policy, unless the appropriate level of fair value analysis is carried out to ensure that the additional commission payment represents fair value to the freeholder and leaseholder.


What if being contacted by a Leaseholder after a policy is sold to the freeholder?


If the leaseholder contacts the firm to advise that they did not receive the appropriate documentation from the freeholder or PMA, the firm is obliged to share the information with the leaseholder. It is advised to check with the freeholder that they are a valid leaseholder prior to sharing any information.