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):
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.