The CMA yesterday published its findings and recommendations from its study into the residential property management sector in England and Wales.
This long awaited and wide ranging report detailed a number of serious concerns relating to the sale of residential buildings insurance by freeholders and property managers:
- The majority of freeholders surveyed denied receiving any sort of commission which was at odds with the various meetings the CMA held during the investigation. Freeholders are of course under no obligation to disclose this information.
- The CMA noted a recent FCA report that commissions for this product are “very high” due to relative lack of complexity in broking the product and the entities buying the insurance, were not the business or individual responsible for the cost.
- The CMA found that residential property managers had an “expectation” of a fee or commission of somewhere between 15 – 20% of the premium for whatever administration work they undertook.
- The CMA acknowledged that concerns relating to the selling of buildings insurance were outside of the scope of their investigation. The report encourages the FCA and the Government to consider whether current regulation of this market works.
Neil Holloway, Managing Director of Mulberry Insurance said: “The overall recommendations of the CMA report make for interesting reading and in particular we are pleased with the emphasis placed upon greater transparency and communication in dealings between freeholders, property managers and leaseholders. “
Neil adds, “More importantly for us, the CMA has unearthed what we consider to be a serious lack of transparency concerning the provision of buildings insurance by freeholders and property managers, supported by certain sections of the insurance industry. It remains to be seen if the FCA will look again at this market.”