(Originally posted in the Daily Telegraph)
THE City watchdog is clearing the way for millions of buy-to-let landlords and flat owners to claw back billions of pounds lost in secret building insurance commissions.
Leaseholders will be defined as customers of buildings insurance under new rules planned by the Financial Conduct Authority (FCA) that will give homeowners fresh grounds to claim for thousands in wrongly charged fees.
The proposals are designed to give leaseholders new ammunition to claim back past commission fees. They will explicitly require insurance firms to act in leaseholders’ interests and will ban them from recommending policies based on commission fees.
Freeholders and managing agents have been charging commission fees of as much as 62pc on building insurance in an industry-wide scandal, highlighted after the cladding crisis inflated insurance bills. The average fee stands at nearly a third, according to the FCA.
The regulator’s investigation of 16 firms found that average broker commission charges on building insurance premiums surged by almost half between 2019 and last year.
Neil Holloway, founder of M2 Recovery, an insurance specialist who works claiming back commission fees, said the rules will unlock an avalanche of claims from flat owners.
Mr Holloway said: “We’re seeing a lot of claims management companies that are getting themselves organised to attack this particular marketplace. They see this as the next big explosion.”
Previously, leaseholders only had a case to claim back commission charges over six years if they were listed as “co-insured” on their lease. The process to do so was also complex.
Under the FCA’s plans, however, all leaseholders should now have a right to get this money back, Mr Holloway said.