Managing agents are often responsible for arranging insurance for the properties they are in charge of, representing leaseholders and tenants in negotiations with insurance brokers.
Did you know, however, that many managing agents are using this as an opportunity to line their pockets by asking for hefty commissions in return for placing business with a particular broker?
Known as secret commissions, these payments can add thousands of pounds to the price of an insurance policy, and all without the leaseholder’s knowledge.
“Many leaseholders are unaware that their premiums are being artificially inflated so that managing agents and freeholders can secure the biggest commission payment they can find in the market without regard for the overall price of the policy, nor the level of cover available,” said M2 Recovery founder and managing director Neil Holloway. “These secret commissions only serve to line the pockets of middlemen and hamper fair competition among insurers.”
M2 Recovery was founded in 2016 to fight back against this unfair practice and recover up to six years’ worth of commission payments for those that have fallen victim to secret commission, with the figures sometimes running into the millions of pounds.
“A leading chain of DIY stores contacted us to perform an audit of their insurance arrangements, and it soon became clear that the landlord’s managing agent had been taking more than £200,000 in commission annually for a number years,” Holloway said. “This had not been disclosed to the landlord, creating a secret profit for the managing agent and retaining the business for the broker and in the end we were able to recover in excess of £1m on behalf of our client”.
And Holloway has a message for anyone still thinking secret commissions are an acceptable way to do business: “If you are a landlord or managing agent and you are knowingly benefitting from secret commissions, then our professional advice to you would be to ensure that you are upholding your responsibility to deal fairly and transparently throughout the process.
“It is just a matter of time before this situation is made public knowledge, and turning a blind eye to unreasonable business practice will not be an adequate defence when this situation is brought into the open and possibly into the courts.”
Find out more about how M2 Recovery may be able to help you recover thousands in secret commission payments