Multi-occupancy buildings insurance – broker remuneration

Read the findings of our multi-occupancy buildings insurance broker remuneration review, our conclusions and next steps.

Read the full review (PDF)

Why we are reporting

On 21 September 2022 we set out our findings and recommendations for measures that industry, the Government and regulators can take to achieve the goal of widely available and affordable cover for leaseholders of multi-occupancy buildings insurance.  

One of our key findings in the broker market was evidence of some high commission rates and poor practices which were not consistent with driving fair value to the customer.  

We noted that our rules require that the prices paid represent fair value and that we were concerned that the levels of commission and practices of commission sharing did not always represent fair value for those bearing the costs of this insurance.   

In the context of our concerns, we committed to reviewing those brokers who charge the highest commissions, publishing our findings and considering the need for further rules on remuneration.

We also committed to consulting on improved information disclosure for leaseholders and on changing the way our rules require firms to consider leaseholders’ interests. A consultation paper has been published alongside our report.

What we found

Our findings corroborate and add to our September 2022 review findings. We found that absolute levels of remuneration, including commissions, have risen by nearly 40% between 2019 and 2022 and that the 16 brokers in our sample paid over £80m of insurance commission to other parties (including freeholders and property managing agents) during the period. Additionally, most of the brokers in our sample did not give us adequate evidence to show that they deliver fair value consistently for multi-occupancy buildings products. 

This emphasises the potential harm to leaseholders and the need for brokers to do significant work to ensure that fair value is consistently delivered.

The findings also evidence the need for the FCA policy interventions set out in our consultation paper which we have published alongside this review.

Next steps

We do not see evidence for additional specific rules around broker remuneration beyond those proposed in our consultation paper and already in place under PROD, and under the new Consumer Duty when it comes into force.

Our focus moving forward will be on ensuring firms meet these existing rules and we will intervene using a range of regulatory tools where there is a need to do so.