The UK Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations Michael Gove recently responded to the FCA in connection with insurance costs for leaseholders.
Excerpt of letter sent by Michael Gove to Sheldon Mills, FCA Executive Director – Consumers and Competition:
“I welcome the focus on potential harms. I have previously expressed concerns regarding the affordability and availability of insurance for leaseholders in flats with fire safety issues. It is neither fair nor decent that innocent leaseholders should be landed with bills they cannot afford as a result of problems they did not cause. I ask that you keep my Department updated on any developments if evidence of disproportionate pricing is found.
Your letter notes that a potential harm is lack of competition between insurers on multiple occupancy buildings. I would like to understand what can be done to encourage a new-entrants into this market.
I am keen to review how all actors in the insurance marketplace have contributed to high premiums for leaseholders. I welcome the work you are considering to re-align incentives for insurance brokers, freeholders and managing agents. I note your request for government to consider specific statutory powers on remuneration to assist the FCA in implementation of restrictions on commissions, if required. I also acknowledge the limitations of the FCA’s regulatory perimeter, particularly for freeholders and managing agents. I will consider all routes necessary to reduce premiums and I am hopeful that we can work together toward this goal.
I look forward to the publication of your full recommendations in July. The findings of the FCA review will be critical to developing a full understanding of the issues in the building’s insurance market. It is important that any recommendations consider all routes, whether enacted by the regulator, Government or industry, to ensure leaseholders get the value for money they deserve.
I request that you continue to consult with the Competition and Markets Authority, particularly as remedies for the current market environment are considered. Finally, I would be grateful if you would continue to work closely with my department so that I can be kept informed of progress. I look forward to hearing from you soon.”