This was in response to the Financial Conduct Authority’s (FCA’s) letter which raised concerns over the commission earned by insurance brokers taking out policies for leaseholders in multi-occupancy buildings, as well as the options available.
Gove wrote to the regulator’s chief executive Nikhil Rathi, saying the FCA’s report confirmed his own concerns regarding “large buildings insurance premium increases in multi-occupancy residential buildings, evidence of weak competition in the market and unacceptable issues faced by leaseholders around the transparency of their insurance costs”.
He also said he was worried about the lack of regulatory protections offered to leaseholders through the FCA, writing: “Leaseholders require better regulatory protection urgently to ensure that they are not taken advantage of.”
Additionally, Gove said he wanted buildings insurance to be widely available and affordable to leaseholders.
He added: “I also ask that you do whatever you can to press insurance brokers to reduce their renumeration fees to further bring down costs for leaseholders in buildings with fire safety issues.”
Gove said he would prevent managing agents, landlords and freeholders from taking commissions attached to buildings insurance and replace this with transparent fees. He also said leaseholders would be given more information to enable them to scrutinise and challenge costs.
Gove asked the FCA to progress with establishing an industry-wide scheme to lower the highest premiums placed on properties with fire safety issues. He called for the scheme to be implemented before summer, following the publication of the FCA’s review of the commission earned by brokers in March.
On Sunday, in an interview with The Times yesterday, Gove said he wanted to abolish leasehold altogether, adding: “I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”
