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Multi-occupany leasehold insurance reforms

What has happened?

In May 2023, the FCA proposed, in its Consultation Paper CP 23/8, new rights and protections for leaseholders that are intended to improve the transparency of the multi-occupancy leasehold buildings insurance market.

What are the key points of the Consultation paper?

Under the FCA’s proposals, leaseholders would be defined as customers of buildings insurance. The rule changes would explicitly require insurance firms to act in leaseholders’ best interests and would bar firms from recommending a policy based on commission or remuneration levels. Insurers and brokers would also need to provide more information about insurance policies to leaseholders, including detail of any commission paid.

An FCA review also published in May (available at found that average per policy insurance broker commission rose by 46% over the review period, which was from 2019 to 2022. Firms in the sample paid over £80m of commission to other parties, usually the freeholder or the property managing agent.

In addition, significant shortcomings by some brokers in applying fair value rules to their remuneration practices, and the impact of this on those ultimately paying the costs of multi-occupancy buildings insurance, were identified.

The FCA now expects brokers to immediately stop paying commissions to third parties (including property managing agents and freeholders) where they do not have appropriate justification and evidence for doing so in line with FCA the rules on fair value.

The FCA has undertaken to carry out further reviews across various products and it has promised to consider the full range of regulatory tools available as this work is progressed.

The Department for Levelling Up, Housing and Communities has announced that it intends to ban the payment or sharing of insurance commissions with property managing agents, landlords and freeholds. The FCA will work with DLUHC to ensure that this action is fully delivered, including changing its rules if required.

How can we help you?

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as and when our team of specialists can serve as your right hand in a meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Are you looking for help with your insurance broking arrangements and fair value assessments, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to