There is little doubt that the publicity concerning the Canary Riverside insurance S.27A (scroll down to Media section) has helped bring to the fore the issue of secret commissions and the lack of fair value for leaseholders. Our S.27A case is regularly referred to by the media and insurance sector. It also influenced the Department for Levelling Up, Housing and Communities (DLUHC), including their proposals for regulatory action to eliminate secret commissions paid to freeholders/landlords/managing agents and efforts to make the FCA better regulate insurers and intermediaries, including new mandatory disclosure of buildings insurance information for leaseholders, including commissions.

On this page we will post articles and updates concerning the regulation and reform of buildings insurance for leasehold properties.

Update - 29th February 2024

On 29th February 2024 the FCA wrote to Michael Gove with an update on their progress in reforming insurance for leasehold buildings. The letter set out the enhanced leaseholder rights and protections that came into effect from 31st December 2023, which require insurance firms to:

  • act honestly, fairly and professionally in leaseholders’ best interests

  • take account of leaseholders’ interests when designing products

  • not have in place remuneration or incentive schemes that could lead the firm to arrange, or the freeholder to take out, an insurance policy not in leaseholders’ interests

  • ensure their insurance policies provide fair value to leaseholders; and

  • provide important information for freeholders and property managing agents to pass on to leaseholders about their policy and its pricing, including the details of any commission, and to provide this information directly to leaseholders if asked to do so.

The Government asked insurance brokers to sign up to an ‘insurance broker pledge’ to help reduce costs and improve disclosure for buildings insurance to residential leaseholders in buildings with fire safety issues. Reich - our Landlord’s broker - is one of the firms that has signed up to the pledge. A far cry from Reich’s position throughout 2020-2022, when they (and the Landlord) refused to provide RACR with any information whatsoever and instructed a KC to represent them at an FTT hearing where they (unsuccessfully) opposed disclosure of any insurance commissions to RACR.

RACR is proud of the role it has played in getting the FCA and the Government to recognise that the regulations and law concerning buildings insurance for leasehold buildings needed changing to protect leaseholders from being abused by unscrupulous landlords and their brokers.

17th January 2024 - Canary Riverside Insurance case raised by MPs at parliamentary committee discussing Leasehold reform.

Canary Riverside’s on-going challenge of £1.6M of unreasonable insurance commissions/fees paid to WMS, a Landlord-owned company, continues to be quoted by MPs as an example of why leasehold law must be reformed. At yesterday afternoon’s select committee hearing MP Barry Gardiner quizzed Matt Brewis, the FCA’s head of insurance, as to how at Canary Riverside there was no contract or documentation between Reich (the insurance broker) and WMS (the Yianis Group-owned company that was paid £1.6m) outlining the sharing of insurance commissions and fees [according to the Landlord’s witness in his oral and written evidence to the FTT].

Asked by Gardiner if the idea that an FCA regulated broker was unable to provide a FTT with a written contract was “strange” Brewis simply answered: “Yes”.

Scott McGee of the Insurance Post provides a summary of Matt Brewis’s evidence to the Select Committee here.

29th September 2023 - FCA announces extensive reform to buildings insurance for leasehold properties. Insurance firms will be forced to act in leaseholders’ best interest - and not those of the landlord and broker. There is little doubt that our high-profile insurance case played a part in these reforms. Of course what the reforms do not do is provide any remedy for the 15+ years over which landlords (like that at Canary Riverside and our sister estate of One West India Quay) were able to benefit from insurers failing to ensure their policies provided fair value to the leaseholders paying the premiums.

The FCA’s detailed report and final rules can be found here.

4th August 2023 - Why commission crackdown alone won’t fix leaseholder insurance costs. Canary Riverside is referenced in the article as an example of how it is the insurer that is acquiescing to/offering significant commissions to the broker and their client. At Canary Riverside the insurer had agreed the contract at 50% brokerage - meaning half of the premium (paid by leaseholders) was being shared between the broker and the Landlord.

Media

Canary Riverside’s insurance decision has attracted media attention, including this article in the Financial Times on February 18th 2023. Links to other articles can be found below.

Our decision also received a lot of attention on Twitter, including from Lord Greenhalgh, the former Minister for Leasehold and Building Safety (2020-2022) who tweeted his support for Canary Riverside.