Secret commissions

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    Secret commissions


    #2
    It's true and also difficult to prove especially if they own their own insurance broker as well.
    Also will cost you if you have been added to a multi block policy where some of those properties are considered risky for a variety if reasons.
    My F/H was found guilty of running an unauthorised HMO. Our insurance shot up even more!

    Comment


      #3
      Hi,

      Are we only concerned with insurance here?

      On recently becoming a director of our RMC and finally having sight of the financial statements it has become apparent that our outgoing managing agent actually acquired 52% of the money paid into our service charge account over a 4 year period.

      How is this possible when RICS had conducted 2 investigations?

      During the same period the same defunct Ombudsmen Services Property also concluded 2 biased investigations!

      In my opinion neither of these organisations should have any input into a new Regulator.

      Comment


        #4
        Which estimated that leaseholders were being overcharged by £700 million per annum in 2011. The Select Committee noted that the leasehold sector is now larger and that figure is likely to be higher.

        ARMA estimate that £1.3 billion of unprotected client money is held by managing agents.

        That is the scale of the problem and explains why unscrupulous individuals have been attracted to the sector.

        Comment


          #5
          Fos - 100% agree. On a par with the NHBC who are signing off thousands of structurally defective new builds. I wonder how these new builds will stand the test of time.

          Comment


            #6
            Michelle - I recommend that you carry out research, this is nothing new, Which magazine and the BBC Watchdog programme raised the subject many years ago. I suggest that you look into how the NHBC is funded.

            Comment


              #7
              Returning to the subject of hidden commissions, the Lord Best report is only recommending that there is transparency on the part of the freeholder and agent, it is not recommending any limits. It is not uncommon for 2 or 3 different businesses to be claiming commission on the same policy and those may or may not be connected to the freeholder or agent. The leaseholder is unlikely to see the whole picture with the current proposals.

              Comment


                #8
                Originally posted by eagle2 View Post
                Michelle - I recommend that you carry out research, this is nothing new, Which magazine and the BBC Watchdog programme raised the subject many years ago. I suggest that you look into how the NHBC is funded.
                I didn't say it was anything new.
                I am aware of how the NHBC are funded which is the whole point as to why these organisations are ineffectual.

                And despite your vastly superior knowledge, I will continue to champion LKP. They have helped many desperate leaseholders.

                Comment


                  #9
                  Michelle - I agree entirely that leaseholders need a voice, it may well be that you are doing the LKP a disservice,

                  Comment


                    #10
                    I suspect that what will happen next is that the new regulator will state directly or indirectly that a certain level of commission is acceptable, lets say that it is 10% although I have seen higher levels accepted in the past.

                    All freeholders or agents will then claim and declare that they have received 10% commission, which could be higher than what they claim now.
                    Additional commissions will be paid to businesses which cannot be directly connected to the freeholders or agents and which will not be declared to leaseholders.

                    Freeholders or agents will then apply to the new regulator and claim that 10% is insufficient, it does not compensate them adequately for the service which they are providing, they will claim that they are researching the market for the most reasonable level of insurance (whether or not that is true), they will claim that they have reduced the cost of insurance (whether or not that is true) which has reduced their income, they will claim that they are providing other services such as dealing with insurance claims etc.

                    The new regulator will then increase the level of commission.

                    Comment


                      #11
                      Originally posted by eagle2 View Post
                      Michelle - I agree entirely that leaseholders need a voice, it may well be that you are doing the LKP a disservice,
                      I have only ever witnessed the strong support they have given, and continue to give to leaseholders trapped in appalling situations. Along with exposing some of the worst offenders.
                      If they had been allowed involvement in FTT, perhaps the system would be more balanced.

                      Comment


                        #12
                        Originally posted by michelle230 View Post

                        I have only ever witnessed the strong support they have given, and continue to give to leaseholders trapped in appalling situations. Along with exposing some of the worst offenders.
                        If they had been allowed involvement in FTT, perhaps the system would be more balanced.
                        Michelle - if you are representative of the LKP, I would strongly object to you being involved with the FTT. I am not saying that the FTT is perfect by any means but there is a layperson on the Tribunal, maybe the choice of layperson could be improved.

                        Comment


                          #13
                          Originally posted by eagle2 View Post

                          Michelle - if you are representative of the LKP, I would strongly object to you being involved with the FTT. I am not saying that the FTT is perfect by any means but there is a layperson on the Tribunal, maybe the choice of layperson could be improved.
                          I would agree that representatives of the LKP should not be involved with the FTT. No one who is likely to be strongly biased should have any involvement.

                          I don't know how the members are chosen for a tribunal (other than that there is a judge/legal person, surveyor, and layperson) but they all need to be impartial. It was the layperson who gave me the hardest time at a recent tribunal, but his questioning/criticism was (I.M.O.) generally reasonable, and he gave the other party an equally hard time (not necessarily over the same issues), so wasn't biased towards either side.

                          Comment


                            #14
                            Originally posted by fos333 View Post
                            Hi,

                            Are we only concerned with insurance here?

                            On recently becoming a director of our RMC and finally having sight of the financial statements it has become apparent that our outgoing managing agent actually acquired 52% of the money paid into our service charge account over a 4 year period.

                            How is this possible when RICS had conducted 2 investigations?

                            During the same period the same defunct Ombudsmen Services Property also concluded 2 biased investigations!

                            In my opinion neither of these organisations should have any input into a new Regulator.
                            Can you break down the 52%? Was this for insurance commissions only?

                            Comment


                              #15
                              Originally posted by michelle230 View Post

                              I didn't say it was anything new.
                              I am aware of how the NHBC are funded which is the whole point as to why these organisations are ineffectual.

                              And despite your vastly superior knowledge, I will continue to champion LKP. They have helped many desperate leaseholders.
                              HANDLING INSURANCE AND THE DISCLOSURE OF COMMISSIONS

                              Regulation of Insurance Activities 9.1 Managers must not advise, arrange or administer insurance or handle claims unless they are authorised to do so under the rules of the Financial Conduct Authority. This requirement does not apply to Registered Providers. Policy content and value for money

                              (S.19 of Financial Services & Markets Act 2000)

                              9.2 Managers should, when asked, be transparent and prepared to demonstrate value for money to the landlord, or leaseholders, without the need for an application to be made to a tribunal for a determination of reasonableness.

                              9.3 Managers should consider the need for, and arranging valuations for insurance purposes, such valuations to be carried out by a qualified valuer.

                              9.4 Managers should identify to landlords and leaseholders in a clear manner, any non-standard cover or additions to any relevant insurance policy, as well as the reason and cost of those additions. This can include but is not restricted to such things as terrorism and flood insurance.

                              9.5 Managers should also notify landlords and residents of any increases to the excess relevant to the policy, and any associated increases to the premium.

                              9.6 Managers should notify landlords and leaseholders of any material change in cover. Handling of Insurance and Commissions



                              9.7 No manager or any associated company of that manager must place insurance on behalf of a landlord or leaseholders in order to increase the receipt of any commission or other profit or income of any kind to it or any other party. It is an accepted legal principle that in dealing with service charge monies, the landlord and /or manager should not profit from those monies, other than to take a reasonable commission for carrying out insurance-related activities, which may include a profit or surplus element. This principle is extended to any associated company or associate of the manager or landlord. Managers should ensure that the landlord and leaseholder(s) are kept informed on the progress of any claims, and settlements. Receipt and Disclosure of Commissions

                              (Bribery Act 2012 Consumer Protection from Unfair Trading Regulations 2008)



                              9.8 Receipt of a commission or other payment of any kind by a manager, whether for insurance or any other activity, is permissible but only if: It does not breach any statutory requirements It is in receipt for services related to that activity of an equivalent value to the commission or other payment received.

                              The services provided for the income should be declared on request The cost of providing those services is not also part of the managers management fee It is disclosed to the landlord before the manager acts for that client landlord, and is agreed in writing by the landlord as acceptable It is disclosed as a percentage of the sum or premium payable, and also as a sum, to all leaseholders who pay the relevant charges that attract that commission without the need for a request by any lessee, at least once per annum



                              The disclosure regarding insurance commission includes details of the relevant authorisation held by the manager under the rules of the Financial Conduct Authority Receipt of any commission payable to the landlord including the amount, is disclosed to leaseholders.

                              9.9 Disclosure as a separate entry in the annual service charge account is acceptable.

                              Comment

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